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| - The European Central Bank on Thursday strengthened its stimulus medicine to help nurse the eurozone through a second wave of the coronavirus. Here's a look at the latest measures unveiled by the Frankfurt-based institution, which analysts said fell short of a "new bazooka" but met market expectations. ECB chief Christine Lagarde announced that the bank would expand its main virus-fighting tool, the pandemic emergency bond-purchase programme known as PEPP, by 500 billion euros ($605 billion) to 1.85 trillion euros. It also extended the scheme by nine months, to March 2022, with Lagarde adding that PEPP will keep running until the ECB judges that "the coronavirus crisis phase is over". The scheme pumps unprecedented amounts of cheap money into the euro area, allowing borrowing costs to remain low to encourage spending and investment. The goal is to support economic growth and push stubbornly low inflation higher to the ECB's target of just under 2.0 percent. The ECB also said it would extend the reinvestment of payments on maturing bonds from PEPP at least until the end of 2023, one year longer than before. But the central bank left unchanged a pre-pandemic asset purchasing programme, under which it already buys corporate and government bonds to the tune of 20 billion euros a month. The ECB said the so-called quantitative easing (QE) will run "for as long as necessary", only ending shortly before the central bank starts raising interest rates again. A key difference between PEPP and the long-running QE programme is that the ECB is not bound by the same limits on how much sovereign debt it can buy from member states, allowing it to hoover up bonds from more fragile, debt-laden economies like Italy under PEPP. The ECB said it would offer three additional rounds of ultra-cheap loans to banks next year and extend the scheme's most generous terms to June 2022. Under so-called Targeted Long-Term Refinancing Operations (TLTROs), banks have the chance to borrow hundreds of billions of euros at very generous rates. The rates are more generous the more banks lend on to the real economy, particularly small businesses which have been hard hit by the Covid-19 crisis. Banks who pass the credit on to companies can benefit from rates up to 50 basis points -- half a percentage point -- lower than the ECB's deposit rate of -0.5 percent. It means that banks are effectively paid by the ECB to lend money. As expected, the ECB left its interest rates unchanged at historic lows. The main refinancing rate to banks remained at zero percent, where it has been since 2016, while the marginal lending facility stayed at 0.25 percent. The deposit rate was kept at -0.5 percent, meaning banks pay to park excess cash at the ECB. The ECB has not ruled out rate cuts in future to keep encouraging banks to lend to firms and households. Lenders have long complained that the super low rates hurt their profitability, however. To mitigate the damage, the ECB in September 2019 introduced a "tiering" system to shield some bank deposits from negative rates. jpl-edf/mfp/wai
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