The legal text on the ECB’s pandemic emergency purchase programme (PEPP) introduced much more firepower than was assumed after ECB’s decision, analysts at Nordea note.

Key quotes

“The new terms on the PEPP allows the Eurosystem to increase purchases of any single Euro-area country if needed inside the envelope of EUR 750bn.”

“The PEPP will be a strong tool to stabilize both government and credit spreads in the short term, or push them significantly narrower, if the ECB so chooses.

“It is likely that the ECB will have to implement even more drastic tools. According to media reports, also the OMT is seen as a policy option.”