The European Central Bank has expanded its €1.35 trillion emergency purchase program by adding another €500 billion and extended it by nine months to the end of March 2022, as EU economies struggle amid Covid-related lockdowns.

“The Governing Council decided to increase the envelope of the pandemic emergency purchase program (PEPP) by €500 billion to a total of €1,850 billion,” the regulator said, in a statement following the meeting of its governing council in Frankfurt.

“It also extended the horizon for net purchases under the PEPP to at least the end of March 2022. In any case, the Governing Council will conduct net purchases until it judges that the coronavirus crisis phase is over.”

The move comes as the second wave of lockdown measures weighs on the euro area’s economic recovery. The program, rolled out in April, is aimed at keeping down borrowing costs for EU members to protect them from economic crisis.

Under the PEPP, the regulator may buy up massive tranches of mostly government bonds to create a baseline of demand for government debt. The ECB is seeking to keep fiscal policy loose across the single currency area amid mounting debt burdens since local governments have to pump fiscal aid to companies and households.  

The program helped Italy and Spain, which currently have high levels of historic debt, to remain in international debt markets at a time when they need to borrow more to fund emergency government projects.

The ECB also held interest rates on its main refinancing operations, marginal lending facility and deposit facility at 0.00 percent, 0.25 percent and -0.5 percent, respectively.

The regulator also announced that favorable terms of its targeted longer-term refinancing operations (TLTRO III), allowing ultra-cheap loans for banks, would be extended to June 2022.

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