Latest News

ECB should stick with plans to end pandemic purchases in March- Villeroy

0
Economy1 hour ago (Nov 22, 2021 16:31)

© Reuters. FILE PHOTO: Bank of France Governor Francois Villeroy de Galhau at the Bank of France in Paris, France, October 22, 2021. REUTERS/Sarah Meyssonnier

PARIS (Reuters) -A resurgence of COVID cases and a jump in inflation do not at this point warrant a change in ECB plans to wind down emergency bond purchases in March, ECB policymaker Francois Villeroy de Galhau said on Monday.

With the European Central Bank’s 1.85-trillion-euro Pandemic Emergency Purchase Programme (PEPP) due to expire in March, the ECB is due to decide in December on the its future and another one in place since 2015.

“I don’t think current developments change this assessment. From today’s perspective, we should end PEPP net purchases in March 2022,” Villeroy said in an interview with German newspaper Boersen Zeitung.

Since financial markets were largely anticipating its end in March, there was little reason to fear disruptive “cliff effects” when it does, he said.

While a jump in COVID cases in some euro zone countries is clouding the economic outlook, a surge in inflation this year has prompted warnings from ECB hawks to not keep monetary policy too loose too long.

Villeroy, who is also head of the French central bank, urged a “patient and vigilant” response at the ECB because the euro zone economy was not at risk of falling back into recession and because the inflation “hump” was temporary and caused by business bottlenecks.

“A premature tightening would be a mistake… But we also have to be vigilant on both sides… If inflationary forces were to become more persistent, we would not hesitate to act,” he added.

The fragile bond markets of Italy, Spain, Portugal and Greece could face a stability test as the PEPP’s end looms as it offers the ECB more leeway to buy member states’ bonds than the 2015 Asset Purchase Programme (APP).

While all decisions did not need to be taken in December, Villeroy said increasing post-PEPP bond purchases under the APP was a possibility, although it was not needed at this point.

Nonetheless, there was a general consensus in the ECB’s governing council on the direction of monetary policy, and what remained to be determined was the “timing and the pace along this path”, which depended on the economic and inflation outlook, Villeroy said.

ECB should stick with plans to end pandemic purchases in March- Villeroy

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Fed-Watchers Emphasize Policy Continuity in Biden’s Picks

Previous article

MARKET WRAP: FTSE higher, Powell re-nominated as Fed Chair, USD strong

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News