(Bloomberg) -- The European Central Bank gave a strong indication that it will likely boost its emergency bond-buying program to stabilize the euro-area economy after governments imposed a spate of new restrictions to control the coronavirus.
For now, Governing Council held its pandemic bond-buying program at 1.35 trillion euros ($1.6 trillion), reiterating that it will run until at least June 2021 and won’t be stopped until the “crisis phase” of the pandemic is past. The ECB’s deposit rate stayed at -0.5%.
The policy statement also said though that new economic forecasts in December will set the stage for more support.
“The new round of Eurosystem staff macroeconomic projections in December will allow a thorough reassessment of the economic outlook and the balance of risks. On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation.”
Follow the ECB decision and press conference on our live blog
Before the decision, economists predicted the ECB would stay on hold now but add 500 billion euros to its bond plan in December.
New coronavirus lockdowns announced by Germany and France in the past 24 hours have highlighted how the euro area’s outlook has darkened considerably since the ECB’s September meeting. The strong summer rebound has given way to a possible double-dip recession, forcing governments to provide more aid and the central bank to keep borrowing costs low.
Read more: Germany, France Impose Strict Month-long Curbs to Rein in Virus
Lagarde will hold a virtual press conference at 2:30 p.m. in Frankfurt, and the market is primed for a clear signal from her that policy makers are preparing to act.
By then, the ECB will have updated economic projections to justify more stimulus, including the first forecast for 2023. Officials might also have a clearer view of key issues including the U.S. presidential election, any U.K. trade deal with the European Union, the impact of Covid-19 containment measures, and progress toward a vaccine.
Shortly before Thursday’s decision, a European Commission sentiment index showed that the recovery in euro-area economic confidence came to a halt in October, even before the new restrictions.
More economic data on Friday are likely to show prices falling and unemployment elevated. There will also be a strong reading for third-quarter gross domestic product, which will serve only to highlight how the recovery that took place after lockdowns ended is now over.
Lagarde noted this month that the upturn in infections has come earlier than scientists expected, and that is a “clear risk” to the economic outlook. Chief economist Philip Lane, who presents policy proposals at the meeting, said the ECB must be prepared for worse scenarios if the virus can’t be contained soon.
The Bank of Japan kept policy unchanged at its meeting ending on Thursday, while cutting the nation’s growth forecast and warning of a more volatile recovery.
The Bank of England is widely expected to add to its own bond-buying program next week. The Federal Reserve, which also meets next week, has signaled that it’ll do what’s needed to keep borrowing costs contained.