3/7/2019, 1:46 PM (Source: TeleTrader)
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ECB to launch TLTRO, hold rates by end of year

The European Central Bank said on Thursday that it would start a program of cheap loans in the framework of targeted longer-term refinancing operations – TLTRO-3, in September. The maturity will be two years and the scheme should expire in March 2021, according to the announcement.

Benchmark interest rates were left unchanged and policymakers revealed they intend to hold them at present levels at least through the end of the year. It compares to "through the summer" from the previous guidance. Both decisions are a dovish shift and investors are waiting for an update on the outlook for economic growth and inflation. The interest rate on the main refinancing operations is zero. Borrowing costs on the marginal lending facility are 0.25% and the rate for the deposit facility is 0.4% under zero.

"Counterparties will be entitled to borrow up to 30% of the stock of eligible loans as at 28 February 2019 at a rate indexed to the interest rate on the main refinancing operations over the life of each operation. Like the outstanding TLTRO program, TLTRO-3 will feature built-in incentives for credit conditions to remain favorable," the statement said.

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