There were two reasons for this. First, the PEPP can provide a significant degree of additional monetary easing as it directly affects the benchmark rates used to price financial market instruments and bank credit in all euro area countries. Accordingly, expanding the overall PEPP envelope by € billion will bring us significantly closer to the pre-COVID-19 inflation path over the medium term.
Second, the PEPP safeguards monetary policy transmission to all asset classes and jurisdictions thanks to the embedded flexibility in conducting asset purchases. We also agreed to extend the PEPP until June 2021. The projections for the euro area show that inflation will start to pick up around this date.