euro area economic outlook. with its inherent flexibility, pepp is best suited to address the dual objective of countering fragmentation in the euro area and closing the medium - term inflation gap that has emerged from the covid - 19 pandemic, in line with the temporary nature of the programme and its close link to the “ coronavirus covid - 19 crisis phase ”. 5 our regular asset purchase programme ( app ) and our interest rate policy, together with our forward guidance on rates and reinvestment, remain geared towards addressing the weakness in broad underlying inflation that is unrelated to the outbreak of the coronavirus. in light of these considerations, the governing council decided to increase the pepp purchase envelope by an additional € 600 billion to a total of € 1, 350 billion and to extend the horizon of net purchases under the pepp to at least the end of june 2021, or in any case until the governing council judges that the coronavirus crisis phase is over. we also decided to reinvest the maturing principal payments from the securities purchased 4 / 7 bis central bankers'speeches under the pepp until at least the end of 2022. calibrating pepp this brings me to the second question – the calibration of the pepp. by removing duration risk from the market, pepp reduces the bond free - float ratio – the share of bonds that need to be held by private price - sensitive investors relative to total bond supply ( see left chart on slide 8 ). in the absence of our new measures, this ratio would have gradually increased on the back of the large coronavirus - induced increase in debt issuance, thereby putting upward pressure on bond yields. the pepp envelope has been calibrated with a view to restoring and preserving financial conditions that are consistent with bringing inflation back to the pre - covid - 19 inflation path. the evidence speaks for itself. upon the announcement of the pepp, and again in response to our actions last week, the euro area gdp - weighted yield curve has shifted downward measurably, and today it is not far from the level we observed before the outbreak of the crisis ( see right chart on slide 8 ). in view of the historically weak inflation outlook and the already accommodative stance, the question arises whether our actions are sufficient and proportionate. in answering this question, the governing council assesses whether the benefits of achieving a faster return of inflation to levels closer to 2 % outweigh the

are no risks. there is currently a lot of uncertainty about the direction of the united states ’ economic policy in the coming months. we now have a good sense of how things will develop in china, but not in the united states. and it ’ s a fairly similar story with the united kingdom. it shows how a country can create severe difficulties for itself. europe offers a robust institutional framework, including for trade. the internal market works and is very important. and now the united kingdom is leaving it and heading for great uncertainty. what can the negotiations achieve? in my opinion, the british have made a huge mistake. populist forces have stirred up people ’ s fears and fear is not a good counsellor. the damage is done, the british economy is already slowing down. now it is just about minimising the negative impact. i hope there will still be a reasonably sensible solution. does us policy also concern you a lot? not many major decisions have been made there yet, unlike in the united kingdom. and i hope that, in the end, reason will prevail. in general we should not get mixed up in power politics where everyone only seeks their own advantage. ultimately, the danger is that large countries dictate deals to the others. that would be catastrophic. we need strong international institutions. and we again need a unified europe. because the weaker europe is, the more dangerous it will be for us. 3 / 3 bis central bankers'speeches