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Intesa Sanpaolo : The European Central Bank wasted no time in announcing the expected strengthening

Intesa Sanpaolo : The European Central Bank wasted no time in announcing the expected strengthening and extension of the PEPP.

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Weekly Economic Monitor – Weekly Economic Monitor – 29 May 2020

Intesa Sanpaolo – Research Department


The purchase programme will run until June 2021, its size will increase to 1350 billion euros, and maturing assets will be reinvested until the end of 2022. All considered, the move is a rather aggressive one. If the baseline scenario is confirmed to be right, this is likely to be the last significant monetary policy loosening measure in the course of the pandemic crisis.

The week’s market movers

This week’s economic calendar in the Eurozone will bring the final reading of 1Q GDP growth in the euro area, that we expect will confirm the advance estimate of -3.8% q/q. April industrial output data will also be released for the Eurozone, Germany, Italy, and France: we expect a further, widespread plunge in activity, that could prelude to the start of a recovery in May.

This week, focus in the United States will be on the FOMC meeting, that should leave policy instruments unchanged, but could start to outline its action strategy for the next few quarters, with particular reference to when and how forward guidance will be changed, and to the path of asset purchases. For what concerns data, the spotlight will be on information published on a weekly basis: new jobless claims, continuing jobless claims, and weekly sales, that should confirm the improvement tied to the lifting of the lockdown. Monthly data on prices (CPI, PPI and import prices) in May should outline a stabilisation, after two markedly negative months. The advance reading of consumer confidence in June could be negatively affected by the social unrest seen over the past few weeks, cooling optimism generated by the lifting of the lockdown.


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Source: BONDWorld