Worldwide as well. Good morning to all of you working from home during this endemic and listening to our pandemicontent this and listening to our digital speak torea we will Kevin Cirilli about the events in washington over the last 24 hours, and certainly the comments of various members of the military about the commanderinchief. We will also look at the ecb, that Important Press conference coming up. Jon will brief us on the difference between 500 billion on dollars. Illi it is extraordinary. To be honest, i have lost of the a million here and a million there of an white of unemployed americans. Jonathan everyone has, not through malice. What we are hoping to see is claims rollover. I thought yesterday was absolutely remarkable, to get that adp report of negative 2. 6 million, and to call that an upside surprise you imagine me telling you at the start of this year that a number like that would be called a big beat, a massive upside surprise . Tom of course, the backdrop is the s p market, 7 below the valentines day peaks we saw. Over to the ecb and Christine Lagardes challenges is with diminished manned and highend employment, you get a thrust of disinflation and lower wage growth, or even wage decline. The disinflation feel here is isnt it . E story, jonathan it is. Initially, she was putting pressure on the fiscal policy maker, and i think she has learned that in europe, it is really difficult to engineer. The italian market did pushback. Plan they announced a little earlier this morning bigger, the expansion bigger than many on the street expected. Euro positive initially. We rolled over a little. Lisa sent me a note moments ago on fiveyearfiveyear forwards. What do you see on the indicators that matters now . On raised alisa j really good question. Why is the euro gaining . Typically this is viewed as inflationary and a debasement of a currency. Not this time. Take a look at the fiveyearfiveyear forward breakevens. In germany, this is a measure of place and expectations. They are below 1 . We are looking at 0. 93 percent over the next five to 10 years, even with unprecedented fiscal and monetary rescue financing. It just highlights we are fighting deflation. We are not at risk of inflation. That is the message for markets. Thatno question about right now. Joining us now, our chief washington correspondent Kevin Cirilli. Too short a time with you in this huge news flow this morning, but i will cut to the chase. What is the president s agenda today . Does he know right now what his agenda is today . Kevin hes going to be meeting with several members of his administration, but it is unclear if we will hear from him directly area i just him directly. I would note i think you are going to see a push of bipartisanship some structural changes over the next month, to be included in legislation coming from congress in terms of Police Enforcement in this country. Kevin cirilli in washington, great to catch up with you. An important conversation down in washington. We want to bring you greg boutle of bnp paribas. A massive move off the back of this cb decision to do even more. Were you surprised they went above and beyond those expectations . I think many people were. Initially, your reaction from 15 minutes ago, we expected 500 billion, we got fixed billion. We got 600 billion. Ecb fightingee an being unamerican. How does the bundesbank and the core economies, how do they react to this new anglo americanlike central banking . Jonathan i think theyve got to go all the way. Fromd some pushback germanys court several weeks ago. And theyve expanded qe with a Pandemic Emergency Purchase Program. This is a much more possible programrk where they can do a lot more and wait it just a little bit differently. Italy, to yourin paper is 0. 173 . We basically cut them in half and the last five minutes or so. Help our american audience. We all understand that the labor model of europe is so different than america. Do they have the grimness of unemployment we are going to be talk about in 25 minutes . Jonathan absolutely, and there is much more pain on the periphery of the continent as there has been over the last 10 years. I think what we have seen at the ecb is that they are willing to do a whole lot more to support the periphery, to keep the bond market wide open. What we need to see on the continent level is for them to agree to allow the states to do more and make sure they are not just our way to support these economies. That we have some kind of fiscal transfer. That is the renewed effort of the last several months. I know people are hopeful. I am conditioned by my experience over the last 10 years. That hope gets smacked around a lot way quickly. Tom there is something about the first chart you look at every morning. First chart was made up of a few stocks. These four or five stocks made stocks, and if or when else trailing behind. We are 70 under where we were on the on valentines day. Greg boutle of bnp paribas knows the meth medics of this. He knows the derivative dynamics of this research. Is it the renewing of a bull market . Greg i dont think so. I think we need to think about this in terms of a two speed recovery. You touched on it. I think some of these mecca caps come of these volatile Tech Companies could potentially be the start of a new bull market. The rest of the market could potentially still have a much more difficult time ahead. I want to talka about moral hazard. We were speaking to bill dudley yesterday, saying that the feds actions increase the risk of moral hazard. You could say the same thing about the ecb. As an equity strategist, how concerned are you that this moral hazard lead to an overshooting and they crash . Greg in some ways, there are echoes of the late 1990s. We had this policy response where the fed came in and cut rates, and really, that drove the last legs of the bubble that resulted in the tech bubble in the late 1990s and the Subsequent Air markets. Clearly, we have a situation where we had real policy shock and awe. Some of the reasons people are giving to invest now is there is no alternative, even the fundamental terrible. I think there is a real risk of moral hazard for equity markets. Jonathan something recently that i thought was it really interesting, once a measure becomes a target, it ceases being a good measure. This whole market has become a target area what is it a measure of anymore . Greg i think theres definitely big disconnect between the outlook for the u. S. Economy and the outlook for the equity market. Tom touched on a lack of rents in the rally on a lack of red a lack of breadth in the market that has become increasingly divorced from the economy. I think if you look at some of the small and midcaps, even secondtier largecap stocks, i think they are much more weighted to the cyclical direction of the u. S. Economy and the outcome we have. Jonathan greg boutle of bnp paribas, great to catch up with you. Off the back of this ecb Rate Decision and ahead of what we expect to come of the bit later this morning, and about 20 minutes time, we will get initial jobless claims in continuing claims in america. And we will show you a labor market still suffering. That is what people widely expect to see this morning. Tom i really cant convey this moment in our history. The statistics really are good statistics back to 1947. There is a lot of data before that theres been other crises along the way. Thewe have never seen dynamics of the American Labor economy like we are seeing right now. I hope we will be more informed at 9 00 a. M. Tomorrow. Day specter ugly that the bottom of the hour ahead of payrolls friday we had expectations that the Central Banks are the ones the heavy lifting are the ecb this morning. The heavy lifting this ecb no, and the different. Lisa how much pressure is the ecb, is the fed taking off of authorities that they need to be doing at this point . That is going to be a question going forward. From new york city this morning, good morning. This is bloomberg surveillance , live on bloomberg tv and bloomberg radio. Still to come on this program, in about 18 minutes, we will have initial jobless claims in america and we will have a News Conference with christine lagarde, right here on bloomberg ritika here on bloomberg. Ritika President Trumps former defense secretary jim mattis is condemning his former boss. In a scathing statement, he said the president the military and is dividing the nation. He also said the country must mockeryhose who make a of the constitution. President trump responded on twitter, saying he didnt like his leadership style or much else about meanwhile, President Trump appears to be unhappy with defense secretary mark esper. Bloomberg has learned to be president confronted esper after he publicly opposed his idea of deploying the military to contain protests. Esper said activeduty troops should be a last resort. The president rapidly asked top advisors if they thought esper could still be effective in his position. It was the 9th street at of protests over the death of george floyd, a black and killed while in police custody. Mayors and governors are largely dismissing President Trumps calls for an increase Police Response to the growing unrest. In minneapolis, there will be the first in a series of memorials honoring floyd. In hong kong, lawmakers have passed a controversial law banning residents from disrespecting chinas national anthem. That adds to fears that beijing is tightening its grip on the former bridge colony. It comes as china plans to enact National Security legislation aimed at hong kong in germany, chancellor Angela Merkels coalition has agreed on a 145 billion stimulus package to get the economy going. That has exceeded the top end expectations by 30 . The deal includes a cut in the valueadded tax, plus money to build out 5g networks, improve railways, and double incentives for electric cars. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Areonetary policy tools really about supporting Economic Activity and driving the economy to higher levels of employment. However, that can actually cause financial asset values to go up, and i can actually exacerbate in a polity, so the feds choice is not have a recovery, have less inequality, or have a recovery with boy and financial with buoyant financial prices. Jonathan we are live on bloomberg tv and bloomberg radio. Feds choice to not have a recovery and less inequality, or have a recovery with buoyant financial prices and more in other the and more inequality . Is it really that by mayor that binary . Tom absolutely not. Bill dudley is widely considered to be a public officer, even though he has left the new york fed. It is a lot more complicated than that. The last fews over days, but that doesnt take away from the nations inequalities. Jonathan indeed. Equity futures unwinding some of the gains over the last 24 hours, down just 11 points on the s p 500. As we get you set up for the opening bell in new york, take a look at europe in both ethics and the bond market. Fx and the bond market. Eurodollar briefly lifting through 1. 15. The hope in europe is that they will do their part. Treasury yields just a little higher, of a single basis point. That curve just a little steeper once again. Earlier thetioned improvement in italian yields. Higher bond prices in italy off of what we have seen. Joining us now is Alberto Gallo of algebris. What will you listen for from madame lagarde . What is the nuance you will listen for . Alberto good morning. Besides the amount of stimulus, the keywording is about how the purchases will be distributed, where the ecb will have the flexibility to help countries that are more at risk. In the first paragraph of their announcement, they say the purchases will be continued to be conducted in a fixable manner over time, across Asset Classes and among jurisdictions, which suggestsere which there may be deviation. We know the Emergency Program of the ecb has been more flexible than the standard qe program, more fixable to go and buy higher amounts in italy or spain, which have been the countrys most hit by the virus. Sizable,a good, positive surprise. But i would say here, the real big news for europe is the fiscal stimulus germany and the eu are doing on the back of this, which means the ecb is no longer putting all the weight behind stimulus. Jonathan lets talk about that because weve discussed it many times on this program. Theyve announced thing, but not everybody has agreed to it. Why are you so hopeful now . Alberto there is a German Program of 130 billion which was Just Announced last night, as you know. That is above expectations. But of course, the Larger Program we are looking at is the program for europe. I do think that this is a game changer for europe, and makes the probability of this program being passed very high. I dont know if it is going to be in the first round, but we have seen germany pushing this, finally an agreement with france, and i think theres more frugal countries that will also back the program after a few tweaks. So this i think is the real big news that many are probably not discounting yet for europe, if you look at european markets. They are still a bit unloved compared to other areas of world. Lisa i want to pick up on something jon was saying, this space that we are going to get something of agreement on the riskean front for fiscal financing. I am wondering whether the same kind of trend would hold europe, that the more the ecb does, the less pressure there will be on the continent to get together and actually provide something as they have been neighbor as they have never been able to do before. Alberto it is possible, but in my 20 year time of observing markets and euros him policymakers, this is first time seeingg makers are european policymakers are ahead of the curve, more than in the u. K. Or in the u. S. , compared to the economic challenges. , so is a unique situation the undervaluation that European Value assets have is something we have seen correcting. Theres a lot of skepticism. I think these are minor issues that will get the help they need in order to pass the program. 500 billion of these are grants, so we are not talking about a loan that needs to be repaid, but a fiscal grand. We are closer to a fiscal union. Jonathan we are closer. I think we all hope we get over the finish line. Alberto, great to catch up with you on this market come on europe, the ecb effort, and the european effort as well. 0. 1 ,ro still positive by at 1. 1244. What we have seen over the last couple of days is a huge i find it y and couple of days is a huge cyclical rally. I find it interesting we have rest in toward piling in. Tom you are absolutely right. What i would say is it has been a couple of days of this trend. I will be honest, i havent done a moving average study, but i will tell you this, christopher research strategas is adamant that we are relatively light against the faang stocks. Lisa we had a huge move in the euro, in the dax, in the cyclical parts of this equity market, in the u. S. As well. Seemingly, everyone who been squeezed into that over the last three days. This morning we fade just a little bit. Lisa im frustrated at trying to understand how much people are pricing in a central bank asked up to bankruptcy. Ultimately, credit risk for not disappear and companies will have to make money, and this is the big pension underlying credit in particular. Jonathan i think it is a really good point. At 8 30 eastern time, around five minutes away, we will have labor market data in the United States ahead of the payroll report tomorrow, and then we will hear from ecb president christine lagarde. All of that around the corner. We are negative. 3 for a big rally monday through wednesday. Tom,new york, alongside together with lisa abramowicz, im Jonathan Ferro. This is bloomberg surveillance. When you say what youre in the mood for, the xfinity voice remote will find exactly that. Happy stuff. The groups happy, im happy. You can even say a famous movie quote and it will know the right movie. Circle of trust, greg. Relax, the needles are jumping. You can learn something new any time. Education. And if youre not sure what youre looking for, say. Surprise me. Just ask what can i say to find more of what you love with the xinity voice remote. Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. From new york city, this is bloomberg surveillance. We are live on bloomberg tv and radio. Alongside tom keene, im Jonathan Ferro together with lisa abramowicz. Your Labor Department data with bloombergs michael mckee. If you can hear me, we 1,877,000 initial jobless claims for last week. That is a decrease of 249,000. We continue the trend lower to make things better, that it is still an extraordinary number. A couple of months ago we were looking at 200,000 a month. Continuing claims is what everybody is focused on. They come in at 21,487,000. That is an increase from last 20 10 52. H was it does suggest we are seeing more people getting continuing claims. It wastwo states not as big a job as people anticipated it might be. Maybe it means we are leveling out. In one thing you have to add is pandemic Unemployment Insurance for people who do not get regular Unemployment Insurance. Selfemployed, 623,000 last week which is a major decline from the week before, which was almost 1. 3 million. It looks like those who are filing have filed and we are working our way through the backlogs and we will get a fairly clean picture of how many people run continuing unemployment in the next week or so. Michael thank you jonathan thank you. There were some hopes continuing claims would continue to roll over. That has not happened. Tom it is a set of data. We have massive noise tomorrow as well. I would notice within all of this, glimmers of the market. These are tragic statistics as every central banker deals with that. Jonathan lets head to one central banker in frankfurt, germany and listen in on ecb president christine lagarde. Garde helped by a sizable support from fiscal and Monetary Policy. The projections and substantial downward revisions the level of Economic Activity in the inflation outlook over the projection horizon. Surrounded by an exceptional degree of uncertainty. While headline inflation is suppressed by lower energy prices, price pressures are expected to remain subdued on account of a sharp decline in real gdp and the associated significant increase in economic slack. Mandate, theits governing council is determined to ensure the necessary degree of monetary accommodation and a smooth transmission of Monetary Policy across sectors and countries. Accordingly, we decided on a set of Monetary Policy measures to support the economy during its gradual reopening and to safeguard mediumterm price stability. First, the governing council decides to increase the envelope for the Pandemic Emergency Purchase Program by 600 billion ofos to a total 1,350,000,000,000 euros. In response to the pandemic related downward revision to inflation over the projection pep expansion will ease the Monetary Policy stance, supporting funding conditions in the real economy, especially for businesses and households. The purchases will continue to be conducted in a flexible manner over time, over Asset Classes, and over jurisdictions. This allows us to effectively stave off risks to this move transmission of Monetary Policy to the smooth transmission of Monetary Policy. Second, we decided to extend their highs in the horizon of to junehases under pep 2021. We will conduct net asset purchases under the pep until the governing Council Judges the Coronavirus Crisis phase is over. Third, the governing council decided to reinvest the maturing principal payments from securities purchased under the pep until at least the end of 2022. In any case, the future rolloff of the pep portfolio will be managed to avoid interference with the appropriate Monetary Policy stance. , net purchases under our asset Purchase Program will continue at the monthly base of 20 billion euros, together with the purchases under the billion until the end of this year. We continue to expect monthly net asset purchases under the asset Purchase Program to run for as long as necessary to reinforce the accommodative impact of our policy rates end to end shortly before we start raising the key ecb Interest Rates. Fifth, we intend to continue reinvesting the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb Interest Rates. In any case, as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodations. We decided to keep the key ecb Interest Rates unchanged. We expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to level sufficiently close to but below 2 within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics. Together with the substantial Monetary Policy stimulus already in place, todays decisions will support liquidity and funding conditions in the economy, help to sustain the flow of credit to households and firms, and contribute to maintaining favorable conditions for all sectors and jurisdictions in order to help in the recovery of the economy from the coronavirus fallout. Currentame time, in the evolving economic environment, the governing council remains fully committed to doing everything necessary within its mandate to support all citizens of the euro area through the extremely challenging times. Role inlies to our ensuring our Monetary Policy is transmitted to all parts of the economy and to all jurisdictions in the pursuit of our price stability mandate. The governing council, therefore, continues to stand ready to adjust all of its instruments as appropriate to ensure inflation moves towards it same in a sustained moves towards its aim in a sustained manner in line with its commitment to symmetry let me now explain our assessment in greater detail, starting with the Economic Analysis. The latest Economic Indicators and survey results confirm a sharp contraction of the euro area economy and rapidly deteriorating labor market conditions. And thenavirus pandemic necessary containment measures have severely affected both the manufacturing and the service sectors, taking a toll on the productive capacity of the euro area economy and on domestic demand. In the First Quarter of 2020, when containment measures were only in place from midmarch in most countries, euro area gdp decreased 3. 8 quarter on quarter. Surveys,on from highfrequency indicators, incoming hard data all point to a further significant contraction of real gdp in the second quarter. Suggestent indicators some bottoming out of the downturn in may as part of the economy gradually reopens. Activityly, euro area is expected to rebound in the Third Quarter as the containment measures are used further, supported by favorable finance conditions and expansionary fiscal stance, and a resumption in global activity, although the overall speed and scale of the rebound remains highly uncertain. This assessment is also broadly reflected in the june 2020 euro system Macro Economic projections for the euro area. Scenario of the gdp isions, annual real in 2020,to fall 8. 7 5. 2 , rebound by 2021 to and 3. 3 in 2022. Compared with the march 2020 ecb staff Macro Economic projections, the outlook for real gdp growth has been revised 9. 5 antially downward by in 2020 and revised upwards 3. 9 1. 9 in 2022. Given the exceptional uncertainty currently surrounding the outlook, the projections also include two alternative scenarios. Publish on our website following this press conference. In general, the extent of the contraction and the recovery will expect will depend on the effectiveness of the containment measures, the success of policies to mitigate the adverse impact on incomes and employment, and the extent to which supply capacity and domestic demand are permanently affected. Overall, the governing council sees the balance of risk around the baseline projection to the downside. Estimates,o eurostat euro area annual h icp inflation decreased to 0. 1 in may, down be. 3 in april, may mainly on accounts of lowered energy price inflation. On the basis of current and future prices for oil, headline inflation is likely to decline somewhat further over the coming months and remain subdued until the end of the year. Over the medium term, we could demand we will put downward pressure on inflation, which will be only partially offset by upward pressures related to supply constraints. Ofketbased indicators longerterm Inflation Expectations have remained at , while surveyls based indicators of Inflation Expectations have declined over the short and mediumterm, longerterm expectations have been less affected. This assessment is also eurocted in the june 2020 systems staff Macro Economic projections for the euro area, inflation in hip c in baseline scenario at 0. 3 2021, and 1. 3 in 2022. 2020 ecbwith the march Macro Economic projections, the outlook for h icp inflation has by. 8 ined downwards 2021, and. 3 in 2022. Turning to the monetary growths, broad money increased 8. 3 in april from 7. 5 in march. True money growth reflects bank credit creation, which is driven in a large extent by the acute liquidity needs in the economy. Moreover, Economic Uncertainty is triggering a shift towards Money Holdings for proportion area reasons. In this environment, the narrow monetary aggregate in one, encompassing the most liquid forms of money continues to be the main contributor to broad money growth. Developments in loans to the private sector continue to be shaped by the impact of the coronavirus on Economic Activity. Of loansl growth rate to nonfinancial corporations 2020, up. 6 in april from 5. 5 in march, reflecting firms needs to financial their ongoing expenditures and working capital in the context of rapidly declining revenues. At the same time, the annual growth rate of loans to households decreased to three point percent in april from 3. 4 amid consumption constraints due to the containment measures, declining confidence, and a deterioration of labor markets. Measures, in particular the very favorable terms for our targeted longterm refinancing operations should encourage banks to expand loans to all private sector entities. Together with the measures adopted by National Governments and european institutions, they support ongoing access to financing, including for those most affected by the mitigations of the coronavirus pandemic. Crosscheck of the outcome of the Economic Analysis with the signals coming from the monetary analysis, confirms an ample degree of monetary accommodation is necessary for the robust convergence of inflation to levels below but close to 2 over the mediumterm. Policies, ancal ambitious and coordinated fiscal stance remains critical in view of the sharp contraction in the euro area economy. Measures taken should be targeted and temporary in nature in response to the pandemic emergency. The three safety net endorsed by foreuropean council workers, businesses, and sovereigns, amounting to a euros, worth 540 billion provides important funding support in this context. At the same time, the governing Council Urges further strong end timely efforts to prepare and support the recovery. We therefore strongly welcome the european commissions proposal for a Recovery Plan dedicated to supporting the regions and sectors most severely hit by the pandemic, strengthening the single market, and building a lasting and prosperous recovery. We are now ready to take your. Uestions thank you for taking my question. My question is about the composition of tech. I am wondering if you talk about anduding junk bonds in pep, if not why not . The second question is about the german Constitutional Courts ruling. I wonder if you discuss this. You said you follow the jurisdiction of the ecj, but it was said the ecb could be constructive in this process. What does constructive mean in this context . What are you prepared to do . Are you prepared to take a fresh governing Council Decision as the Constitutional Court is asking you to do . Pres. Lagarde thank you for your two questions. On your first question, which has to do with whether or not we include junk bonds in our , we havepolicies defined parameters for our purchases. We want to insulate the way we conduct policy from the effect of the pandemic and avoid fulfilling procyclic al he. We will continue procyclic ally. We will continue to observe and take appropriate action. Apart from that the governing council has not discussed this matter. Which hascond point, to do with the Council Court decision, i want to remind you that the ecb is subject to the jurisdiction of the court of justice of the European Union. The pspp has been judged by the court of justice of the european with ourinline policy mandate. We have taken note of the judgments, which is directed at the German Government and the german parliament, and we are confident a good solution will be found. A good solution that will not compromise the ecbs independence, will not compromise the primacy of the European Union law or the ruling of the European Court of justice. Do, and ecbhat we governing council regular lee assesses the effectiveness, the efficiency, and the cost benefits of the Monetary Policy measures. It does so on a regular basis, and as you can imagine given the package we have debated and discussed and agreed upon, this has been the case in great depth during the course of our morning session. It is typically reflected in our accounts and it will be reflected in our accounts as well. Thank you. The next question from bloomberg. Good lagarde afternoon. Pres. Lagarde i said good afternoon. Good afternoon. My first question some of the reports before the meeting suggested not all of the members of the governing council are ready to support an increase in pep. Can you give us a sense of how wide was the support for the measures you adopted . My second question is about your strategy for investment under pep. You say they will continue until the end of 2020. If everything goes according to plan, the rollout of those purchases could start at the beginning of 2023. Sayshile, the guidance programs will continue past the date of the first rate hike increase. Does that imply that the roll up from pep would start before the first rate hike . Thank you. Pres. Lagarde your question reframing for you the cost benefit i was tempted to say the benefit cost because there are more benefits than cost of our pep. Hasuld observe that the pep already demonstrated it is a successful program. The downwardted spiral in Financial Markets and reduced any tail risks at the time, without which we have been in a serious situation in terms of growth and inflation outlook. There are two main tractors that pep,led us to reconsider and certainly expand the size of pep, as well as its duration. The outlook for price stability has been significantly affected by the fallout from the covid19 crisis. As i mentioned earlier on, we had to revise our inflation outlook. If you look at the mediumterm horizon of our projections, which is 2022, we are talking about 1. 3 as opposed to 1. 6, which was the rise and we had in march, prior to covid19. Second factor that has also led pep andconsider increase its size and extend its timing is financial conditions for the euro area are tighter today as measured by sovereign yields and broader metrics of financial tightness. In a situation where the economy needs easier conditions to achieve price stability. In that context we judged it was necessary to increase the size. I can assure you there was a unanimous view in the governing council that action had to be taken in the face of that inflation outlook, and given our mandate of price stability, had to be taken. We decided to increase the size pep in order to ease aggregate financial conditions, safeguard the transmission of our Monetary Policy to all Asset Classes and jurisdictions thanks to one particular aspect of pep which is its flexibility in conducting our purchases, and back to what i would call the precovid inflation path. Extension ofd the pep by the amount that i have mentioned, which is 600 billion euros. Horizon toexpand the june of 2021 . It is because we have a sense that by then inflation will start take aim again, and we will have a bunch of visibility of the situation at that point in time. It is also coherent with a lot of our other Monetary Policy tools, those we have determined in march or fine tuned and improved our last april Monetary Policy governing council meeting. That we of reinvestment have agreed to push until the , we have determined that because it helps ensure financial conditions remain sufficiently supportive over a protracted recovery phase, and it also reflects the nature of pep, which is different from the pspp. We believe giving more visibility and certainty over that horizon was certainly a good decision to make. The next question will go to the reporter from cnbc. Thank you very much. Can you hear me . Pres. Lagarde yes we can. That is great. We have problems last time. My first question is the size of the pep program, why you have agreed of raising it by 600 billion and not more. To keep the current pace, that it is used up by february 2021. The question here is what make size. D decide the also on the Interest Rate, because you are keeping the Interest Rate down. Can you confirm you think it is sincee end where we are the lower bound has been breached, and what would have happened to cut Interest Rates further . Thank younk you for the pres. Lagarde thank you for the question. On the choice of 600, there was a debate within the governing council as to what would be the appropriate size. We collectively determined, there was broad consensus around that proposal, we collectively determined the 600 billion the 600 billion euros should bring us closer to what i call the precovid inflation path while allowing us to monetary how some Key Developments unfold in the coming months that will impact our policy. We will understand a little better how the economy rebounds in the Third Quarter and then later on in the course of the. Oming months of course we have better data, better numbers, and we can come up with more reliable scenarios and even a projection. It is still surrounded by a lot of uncertainty. That will bring us significantly closer to that path of the precovid inflation. Yound, i want to remind that we have decided to use pep, but it is not that it was pep and nothing else. We have a whole package of tools to great extent, addressing all sectors of the economy, all access of our action, and i will remind you that for instance with start with a very low Interest Rate, which is associated with forward guidance, which as you will have noticed has not changed as indicators in the introductory statement. We are also using and will be seeing interesting elements in june. Targeted longterm refinancing operations which are offered to the Banking Sector as extremely attractive terms. To remind you, if banks keep their exposure to the economy and keep