ECB's Lane: Fully prepared to further adjust instruments if warranted

The European Central Bank (ECB) is fully prepared to further adjust its instruments if warranted, ECB's chief economist Philip Lane reiterated on Tuesday. "This includes increasing the size of the PEPP and adjusting its composition, by as much as necessary and for as long as needed," Lane further explained.

Additional takeaways

"We must ensure our monetary stance provides sufficient accommodation and guards against the escalation of tail risks."

"In all scenarios, a deep recession is envisaged. In the severe scenario, real GDP would fall by 12% in 2020."

"APP and PEPP are estimated to compress the term premium significantly by around 80 basis points at the ten-year tenor."

"Decisions we have taken since March contribute to a further easing of ten-year rates by lowering the term premium by more than 10 basis points."

Market reaction

The EUR/USD pair largely ignored these comments and was last seen gaining 0.25% on the day at 1.0940.