Inflation, inflation, inflation – the sharp rise in inflation rates in recent months has increased the pressure on Europe’s monetary authorities to act. Critics accuse the ECB of fueling inflation with its flood of money, which it actually wants to keep in check. There is no end in sight to the low interest rates, but the central bank is at least planning to realign its multi-billion dollar purchases of government bonds and corporate papers.
At the meeting of the Governing Council this Thursday, among other things, an “appropriate calibration” of bond purchases will be discussed, announced ECB President Christine Lagarde. The decisions will be published in the afternoon (1:45 p.m.).
A formal decision is expected to expire the PEPP (Pandemic Emergency Purchase Program) purchase program launched to cushion the corona shock. Lagarde had already announced this after the meeting of the Governing Council at the end of October.
This would not end the controversial purchase of government bonds by the ECB: The central bank has already decided that it will reinvest money from maturing securities even after the PEPP has formally expired. In addition, bond purchases are now an integral part of the ECB’s toolkit. In the Governing Council there is sympathy for the idea of transferring the flexibility of the emergency purchase program PEPP, for which a volume of 1.85 trillion euros is estimated, to other bond purchases.
Leading representatives of the central bank recently affirmed that the ECB would continue to support the economy, which is still ravaged by the pandemic, with bond purchases in 2022. The purchases help states and companies alike: They do not have to offer such high interest rates for their securities if a central bank is the big buyer in the market. (APA)
