Interest rates

• b'Cashflow Forecasting Module provides the ability to generate cash flow projections based on loaded vectored and/or user-input prepayment speeds for mortgage-backed securities, under multiple scenarios comparing projections under different prepayment speeds for both sides of balance sheet.
• The module stores all cash flows generated and/or imported to the database, enabling you to analyze data through reports and extracts.\nThe TPG system provides access to a broad cross-asset class of information for derivatives and fixed income instruments using industry-standard models, allowing full disclosure of the data, formula models, analytics, and risk measures.\nPer Cory Sokoloski, Senior Vice President of Sales for TPG Software, "Our comprehensive solution assists our clients in complying with complexities of the Libor-Transition for now and in the future as part of their daily business process.
• The strength of our solution is that verification is embedded in the SOFR Genius Product reducing the time, effort and cost needed to satisfy regulatory and business requirements.
• "\nContact TPG for more information.\nView source version on businesswire.com: https://www.businesswire.com/news/home/20210420005730/en/\n'

• As a leading vendor participant in the ARRC Business Loan Working Group, AFS appreciates the complexities and challenges presented when transitioning from LIBOR to alternative interest rate methods.
• Since January 2019, we have been a working member of the ARRCs Business Loan Working Group.
• Our LIBOR Transition team is ready to review your requirements and guide your organization to the correct LIBOR transition solution.
• AFS is the global leader in providing real-time, end-to-end commercial lending solutions to the worlds top-tier institutions.

• The new term loans will mature on April 1, 2028 and will bear interest, at the option of STG, at LIBOR (or successor rate) plus 3.00% or at base rate plus 2.00%.
• The matters discussed in this news release include forward-looking statements regarding, among other things, future events and actions.
• When used in this news release, the words outlook, intends to, believes, anticipates, expects, achieves, estimates, and similar expressions are intended to identify forward-looking statements.
• The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements except as required by law.

Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at NYU Stern Fireside Chat

• The pandemic has posed enormous challenges to monetary policy, which have varied over time.
• By offering to purchase large amounts of securities, central banks succeeded in restoring orderly trading conditions.
• In doing so, we prevented the public health crisis from turning into a full-blown financial crisis, a risk that was particularly acute in the euro area.
• This was reinforced, in a strong act of European solidarity, by the agreement on the EU Recovery and Resilience Facility.
• The question facing the ECBs Governing Council at its meeting on 10December 2020 was how to best provide this support.
• One was that the unprecedented fiscal and monetary policy support had succeeded in delivering highly favourable financing conditions.
• The nominal euro area GDP-weighted yield curve stood at its lowest ever recorded level (left chart, slide 2).
• The Governing Council responded to these conditions with a powerful commitment to preserve favourable financing conditions.

What distinguishes a policy of preserving favourable financing conditions?

• The first is a departure from a policy that attempts to push interest rates even lower.
• The benefits from reducing interest rates further from very low levels may still outweigh the costs in certain circumstances.
• But when uncertainty is large and private demand constrained, monetary policy is like pushing on a string.
• In such circumstances, monetary policy can best support the economy by ensuring that favourable financing conditions prevail for as long as needed.
• The second characteristic is the way we deliver on our commitment to preserve favourable financing conditions.
• We buy more when financing conditions are becoming less favourable, and we buy less when they are stable or improving.
• Today, they are a means to an end: they are used to the extent necessary to deliver on our commitment to preserve favourable financing conditions.

Preserving favourable financing conditions: a reaction function

• And what is the reaction function?
• The other principle is that the favourability of financing conditions is a relative concept.
• Conversely, an increase in real interest rates is not necessarily a sign that financing conditions are becoming less favourable.
• These considerations are what distinguishes a policy of preserving favourable financing conditions from yield curve control.
• The latter targets a fixed level of nominal yields with a view to increasing, rather than preserving, the degree of monetary accommodation.
• These types of movement, if sizeable and persistent, make financing conditions less favourable as they are not accompanied by a corresponding increase in real equilibrium rates.
• A firm commitment to favourable financing conditions therefore requires a certain minimum purchase volume to offset this effect on real interest rates.
• Preserving favourable financing conditions therefore puts the drivers of changes in financing conditions, and their speed of adjustment, into the focus of our assessment.
• In addition, changes in market-based financing conditions have to be assessed jointly with the likely future trajectory of the economy, in particular the inflation outlook.

Assessing recent market developments

• Between the December decision and our most recent Governing Council monetary policy meeting on 11March, we saw a rapid increase in global and euro area nominal interest rates.
• The factors that have caused a rise in risk-free interest rates have been largely benign in the euro area.
• These movements should not be seen as reflecting a genuine reappraisal of the expected future path of inflation.
• Term structure models suggest that much of the recent rise in nominal ten-year OIS rates reflects an increase in term premia which, in turn, likely reflects a rise in the inflation risk premium (right chart, slide 9).
• In other words, markets have started to revise the balance of risks around the medium-term inflation outlook.
• It is also unclear how firms will adjust their profit margins to make up for lost income and higher leverage.
• Real rates up to a maturity of five years have even continued to reach new historical lows in recent weeks (left chart, slide 11).
• Against this backdrop, the Governing Council announced that we would significantly step up purchases under the PEPP in the second quarter, in line with market conditions.

Conclusion

• Preserving favourable financing conditions is a powerful policy response to the challenges we are currently facing.
• It is a strong commitment to protect an exceptional degree of policy accommodation for as long as needed.
• It signals our unwavering determination to offset the impact of the pandemic on the projected inflation path.
• This promise is underpinned by a purchase envelope that is unprecedented in the history of the ECB.