ECB policymakers debated more bond purchases, bank loans - sources

FRANKFURT (Reuters) - European Central Bank policymakers already debated the ingredients of their next anti-pandemic stimulus package on Thursday, with more bond purchases and multi-year loans to banks getting the most attention, sources told Reuters.

President Christine Lagarde said after the meeting the ECB would “recalibrate” its policy in December to contain the growing fallout from a second wave of coronavirus infections, but she would not be drawn on what that meant in practice.

Two sources told Reuters some policymakers favoured expanding the ECB’s Pandemic Emergency Purchase Programme (PEPP), which has exhausted nearly half of its 1.35 trillion euro ($1.60 trillion) firepower.

Others put greater emphasis on even more generous credit for banks under the ECB’s Targeted Longer-Term Refinancing Operations (TLTRO) while others still wanted a package featuring both, the sources said.

While no specific proposal was discussed, one of the sources said the discussion was de-facto prepositioning for the December meeting.

One of the open questions relate to the composition of PEPP and how to make it targeted to the current juncture, one of the sources said.

Under that programme, the ECB has bought government, corporate and covered bonds as well as commercial paper.

The sources added that policymakers from southern countries were expressing greater concern over the outlook while northern policymakers were urging patience.

An ECB spokesman declined to comment.

Reporting By Frank Siebelt, Francesco Canepa and Balazs Koranyi