An emergency move by the European Central Bank to provide stimulus to the European economy has been welcomed by money managers.
The bank's governing council announced late Wednesday a €750 billion ($846.7 billion) Pandemic Emergency Purchase Program, a temporary asset purchase program of private and listed securities. The move aims to "counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus, COVID-19," the ECB said in a statement.
Purchases will continue until the end of the year at the earliest, until the governing council "judges that the coronavirus COVID-19 crisis phase is over."
The ECB will also purchase Greek government bonds under the new program, which had been exempt from ECB asset purchases since 2015 due to their low credit rating. Purchases could run to about €12 billion of Greek debt, said a statement by Greece Minister of Finance Christos Staikouras.
The size of the program can be increased or adjusted "by as much as necessary and for as long as needed. (The governing council) will explore all options and all contingencies to support the economy through this shock," the statement added.
Money managers welcomed the ECB move, which they said followed disappointment at the bank's decision not to cut interest rates last week.
"The size of the program is what we were looking for at the ECB last week and following a week of European bond market dislocation," said David Zahn, head of European fixed income at Franklin Templeton, in a comment.
Mr. Zahn said the move should benefit Italian, Spanish and Greek debt the most but also will tighten spreads of other European government bonds.
"It's a very good package, at last," said Gilles Moec, group chief economist at AXA Investment Managers, in a separate comment. "They have added corporate commercial paper to the list of purchasable assets which is important given the pressure on this market, while on the macro point of view it is key to a number of crucial European corporates which don't need this additional concern at the moment."
European markets and the currency were down early Thursday. The DAX fell about 1%, the FTSE All-Share was down almost 2% and the euro was down about 1.6% vs. the dollar to $1.0745.
The ECB's latest measure adds to moves by other central banks across Europe, including in Germany, France, Spain, Italy, Finland, the U.K. and Norway. Stimulus includes interest rate cuts, corporate loans and additional spending on health care.
Also Thursday, Norges Bank expressed concern at the "extraordinary situation in the market for Norwegian kroner." The kroner was down 14% at its lowest point vs. the dollar on Wednesday.
"Against this background Norges Bank is continuously considering whether there is a need to intervene in the market by purchasing Norwegian kroner," a statement said.
Norges Bank also said it will convert an increased amount of petroleum revenues into kroner, drawing on the country's sovereign wealth fund, the Government Pension Fund Global, Oslo. Daily sales of foreign exchange increased to 1.6 billion kroner from 500 million kroner, effective Wednesday.
Bloomberg contributed to this story.
