The ECB left key interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively, and said it will “continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,850 billion until at least the end of March 2022 and, in any case, until it judges that the coronavirus crisis phase is over.”

The ECB expects to conduct a significantly higher pace of bond purchases over the next quarter under the PEPP program. Still, the pandemic emergency purchase program was kept unchanged at €1.85 trillion.

Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion.

The ECB considers the recent rise in inflation is only temporary due to some technical factors such as the rebalancing of the HICP components weightings and the seasonally base effect of past year decline in inflation.

 The ECB did not increase the size of the PEPP envelop, but the expected rise in pace of asset purchases would keep European bonds lower especially German bunds, and Eurozone benchmark bond yields.

Christine Lagarde said PEPP is not Yield Curve Control. However, the ECB planed action for the second quarter is mainly in response to the move higher in nominal bond yields.