DAVY VIEW

Falling equity markets yesterday highlighted the threat a second lockdown poses to the ECB’s GDP growth and inflation forecasts. Hence, Christine Lagarde will likely signal today that the ECB is ready to expand the Pandemic Emergency Purchase Programme (PEPP) at December’s meeting. If the consensus for a €500bn expansion is correct, this implies that the ECB would purchase an additional €8bn of Irish government debt in 2021 on top of the €10bn in H1 which we expect under current plans.