• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

ECB trims emergency support but insists “no tapering”

September 9, 2021 by David Barret Leave a Comment

September 9, 2021

By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) -The European Central Bank will trim emergency bond purchases over the coming quarter, it said on Thursday, taking a first small step towards unwinding the emergency aid that has propped up the euro zone economy during the pandemic.

After the ECB pulled out all the stops last year as COVID-19 ravaged the economy, high vaccination rates across Europe are now bolstering recovery prospects and policymakers were under pressure to acknowledge that the worst is over.

But with rising U.S. infection rates making the Federal Reserve hesitant to wind down its stimulus, the ECB trod cautiously: it flagged no other moves, notably how it ultimately plans to dismantle the 1.85-trillion-euro Pandemic Emergency Purchase Programme (PEPP) which has kept borrowing costs low.

“The lady isn’t tapering,” ECB President Christine Lagarde told a news conference to explain the decision, using a turn of phrase reminiscent of former British Prime Minister Margaret Thatcher’s famous declaration “the lady’s not for turning”.

“What we have done today … unanimously, is to calibrate the pace of our purchases in order to deliver on our goal of favourable financing conditions. We have not discussed what comes next,” she said.

Earlier, the ECB released a statement saying its Governing Council agreed favourable financing conditions could be maintained with a “moderately lower pace” of asset purchases.

In the past two quarters, the bank has purchased around 80 billion euros worth of debt each month. It provided no numerical guidance for the three months ahead, but analysts had predicted prior to the meeting that purchases would fall to between 60 billion and 70 billion euros in those months.

Highlighting policymakers’ caution, the bank also maintained a longstanding pledge to ramp stimulus back up if markets turn and financing conditions require it.

While Lagarde stressed that future recovery prospects still depend on the continued success of Europe’s vaccination programme and also the pace of infections across the world, the economy of the 19-country bloc is perking up.

The ECB upgraded its growth forecast for this year to 5% from a previous 4.6% target and raised inflation expectations. Inflation is now seen at 2.2% this year, falling to 1.7% next year and 1.4% in 2023 – well below the ECB’s 2% target.

Lagarde said policymakers continued to believe that wage pressures were modest and that supply bottlenecks currently hitting materials and equipment would start to ease.

With Thursday’s decision, the ECB’s key rate remains unchanged at minus 0.5%, PEPP remains on track to end next March and purchases under the older Asset Purchase Programme (APP) remain at 20 billion euros a month.

DECEMBER DECISION

But by skirting the big issue around the exact end of emergency support, the ECB has effectively left that contentious decision for December’s meeting.

The difficulty is that the bank must signal the end of PEPP, its biggest asset-purchase scheme, as the coronavirus crisis ends, while promising to maintain support via other tools because inflation is still too low.

That will require the ECB to shift its focus to the more rigid, longer-established APP, the bank’s primary stimulus tool before the pandemic.

But to make the APP fit for purpose, the ECB must increase purchase volumes and make its rules more flexible – which conservative members of the Governing Council could resist, fearing that the ECB is already acting beyond its mandate.

($1 = 0.8462 euros)

(Writing by Mark John; Editing by Catherine Evans)

Source Link ECB trims emergency support but insists “no tapering”

David Barret
David Barret

Related posts:

  1. Fate of national daycare in the hands of Canadian voters
  2. With a little help from their friends: how The Sims 4’s community has helped shape the game
  3. Pancake aims to make customers flip for its virtual home design platform
  4. Best cordless vacuum 2021: The top models for pet hair and hardwood floors we’ve tested

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Why Do So Many Nobel Laureates Develop “Nobel Disease”?
  • Does The Moon Affect The Menstrual Cycle? Yes, New Study Claims
  • The Second Closest Asteroid Flyby Of Earth Ever Recorded Just Whizzed Over Antarctica
  • New Theory Reveals Shackleton’s Legendary Ship “Endurance” Was Doomed To Sink In 1915
  • Revolutionary Discovery In Immune System Regulation Leads To Nobel Prize In Medicine Win
  • These May Be The First Animals To Evolve On Planet Earth, Skin Cells Have Been Used To Create Fertilizable Eggs, And Much More This Week
  • The Largest Eagle To Ever Live Had A 3-Meter Wingspan And Ate Moa For Lunch
  • “Tangy And Herbaceous” Yogurt Made With Forest Ants – And They’re Not For Extra Protein
  • This Bizarre Jurassic Reptile Is A Weird Mix Of Snake And Lizard
  • Mummified Cheetahs, Skin Cells Turn Into Eggs, And Almost Life On Enceladus
  • Three Green Comets Are Heading Our Way Right Now – Including The Best Of 2025
  • You Can Make Lab-Grown Meat In Your Own Kitchen – And This Company Wants To Show You How
  • It’s Supermoons Galore This Fall, With Three Of Them From Next Week Until December 4
  • Kidney Blood Type Changed From A To O Before Transplant, Bringing Universal Organs A Step Closer
  • What Has The Worst Breath In The Animal Kingdom?
  • The Longest Living Animals On Earth Have Been Alive For 2,300 Years
  • A 100-Year-Old Harpoon Was Found Embedded In The World’s Longest-Living Mammal
  • Sheep Leather, Slingshots, And A 650-Year-Old Shoe: Abandoned Vulture Nests Hide “Extraordinary” Artifacts
  • For The First Time In History, People Could Soon See Ice-Free Peaks In Yosemite
  • US Breaks New Measles Record, Surpassing 1,500 Cases – The Most In 33 Years
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version