ECB June meeting: a further increase in PEPP

We expect the ECB to announce at next week’s policy meeting an increase of its Pandemic Emergency Purchase Programme by €250 billion. The ECB will also stress i t s general willingness to adjust the volume of purchases further , should this be deemed necessary. We think that President Lagarde will also use the opportunity to stress the ECB’s independence vis-à-vis any national institution, such as the German constitutional court. That said, it will be crucial to see whether Mrs Lagarde will strike a rather pragmatic tone , that would open the way for a “smooth” solution of the problem raised by the partial rejection of the PSPP by the German court , or whether she w i ll reject outright any cooperation on the ECB’s side.