FRANKFURT (Reuters) – The European Central Bank (ECB) could end bond buybacks under its Pandemic Emergency Program (PEPP) next March, the head of Austria’s central bank said on Monday .
Robert Holzmann, also a member of the ECB’s Governing Council, has indicated that the markets may be right not to anticipate an increase in bond purchases under more traditional programs.
With the pandemic retreating, analysts, including those interviewed for the ECB survey, expect the PEPP, endowed with 1.850 billion euros, to end in March 2022 and do not plan to ‘increase in the traditional asset purchase program (APP) to compensate for lost stimulus measures.
“This is how the market sees it and I think it gives the right assessment,” Holzmann said at a roundtable hosted by UBS. “We don’t know yet, but for now it looks like the end is in March.”
The exceptional aid must end once the COVID-19 pandemic has passed, but the ECB’s support will continue through other mechanisms.
“We still have other programs, like the APP, which can continue, be modified or left unchanged,” said Robert Holzmann, one of the institution’s most conservative politicians.
He also warned that with the pandemic far from over, that timeline could evolve further and the ECB will conduct a more in-depth assessment in September, when the ECB’s new forecast is made.
For his part, Jens Weidmann, President of the German Bundesbank, spoke in favor of a gradual reduction in purchases made under the PEPP, believing that this program should be stopped when “all significant measures to contain the pandemic” have ended and that the economic recovery will be “strong”.
“Due to the ever-present uncertainty, we cannot determine the exit from the crisis mode of monetary policy very in advance,” he added. “In order not to suddenly stop PEPP, however, net purchases could be reduced in advance, step by step.”