The questions of how long and how quickly the European Central Bank will continue to proceed to buy bonds in their fiercely easy monetary policy stance have come to the fore and center on Thursday. Next year the stabilization meeting of policy makers.
ECB President Christine Lagarde said the Board of Governors did not discuss the phasing out of the pandemic influenza emergency purchase program, saying such a move would be “simply too soon”. The focus on potential cuts of the program, which has a firepower of 1.85 trillion euros ($ 1.22 trillion), comes after some ECB officials signaled the possibility of a cut start. show next quarter.
The ECB, after the previous Board of Governors meeting in March, announced that it would proceed to purchase PEPP at “significantly higher rate” in the second quarter. Some analysts argue that ECB purchases so far have been disappointing, with the increase in total purchases offset by the increased number of acquisitions.
Lagarde urged observers not to focus too much on weekly data, even though Capital Economics economist Jack-Allen Reynolds says weekly measures show a growth. Excluding data from the first few weeks of January and the week before Easter, both periods when purchases were low for seasonal reasons, he saw weekly PEPP net buying rising from an average of 14. , 4 billion euros to 18.3 billion euros, he said, but noted that “obviously less than investors expected, which helps explain why bond yields have risen since the meeting. March.”
meanwhile, for the most part left undisturbed, down 0.1 percent to $ 1.2018. The euro is up 2.5% against the dollar so far this month as the dollar’s first quarter recovery has declined slightly. Lagarde, asked about the euro level, stressed that the ECB does not target the exchange rate but watches closely as its movements affect the inflation outlook.
A stronger euro weighs heavily on prices, making it more difficult to reach the ECB’s inflation target near but just below 2%. Lagarde’s comments show there are no urgent worries about the coin’s level, analysts said.
Adam Pickett, currency strategist at Citibank, said: “We see little risk of the ECB preventing the EURUSD from remaining more stable,” said Adam Pickett, currency strategist at Citibank. .
Pickett said Citibank was “encouraging” more of a structural depreciation stance towards the dollar for a number of reasons, encouraged by an improved vaccine rollout in Europe, round value rotation continues to flow into European stock markets and the potential for fiscal stimulus is increasing in Germany.