The pandemic was a particularly extreme exogenous shock and the PEPP has shown that, under stressed conditions, flexibility in the design and conduct of asset purchases has helped to counter the impaired transmission of monetary policy and made the Governing Council’s efforts to achieve its goal more effective.
Within the Governing Council’s mandate, under stressed conditions, flexibility will remain an element of monetary policy whenever threats to monetary policy transmission jeopardise the attainment of price stability. This means that we are ready to use a wide range of instruments to address fragmentation. One application of the flexibility principle relates to the reinvestment of the PEPP portfolio.