A sort ofAt the next meeting in December, the council will decide how to deal with Bond purchase The central bank should continue. In particular, the PEPP crisis plan will expire in March.
The governor of the Austrian Central Bank, Robert Holzmann, now proposes that if inflation develops accordingly and is close to the official target for a long time, all bond purchases may be phased out in the fall of next year; as early as September next year.
According to Bloomberg, Holzman promised this at an event in London. He pointed out that the APP bond purchase plan launched in 2015 aims to bring consumer price increases back to 2%. Holzman said: “The elimination of this situation and the end of the plan may come in September or the end of the year, depending on inflation trends.” “I will not bet that the inflation rate will be less than 2% by the end of 2022.”
“There is no reason for another round”
However, the model suggests that inflation will fall below that level in 2023 or 2024, he added. Holzman opposed changing the traditional bond purchase plan and opposed another round of targeted long-term refinancing transactions, with the purpose of allowing banks to provide more loans to the real economy.
“Our existing data analysis shows that the impact of additional loans is very small,” Holzman said. “I think there is no reason for another round-the economic impact is small.”
Overall, the European Central Bank is not expected to stop buying bonds altogether so quickly. “Even if the crisis plan ends as scheduled at the end of March 2022, the European Central Bank intends to continue its normal purchase plan until the first interest rate hike is imminent,” said Holger Schmiding, Chief Economist of Hamburg Bank Berenberg. “We may have to wait until the spring or summer of 2023 to see the European Central Bank announce that it will stop buying bonds altogether-we expect the European Central Bank to end bond purchases in September 2023, and then raise the key interest rate for the first time in 2023. December 2023 moon.”
Jari Stehn, an economist at investment bank Goldman Sachs, predicted the following timetable: He believes that the central bank is unlikely to take any further measures when the crisis plan expires at the end of March next year. Plan APP will be purchased. “In my opinion, there will be a transitional arrangement,” Stehn said: “The ECB will either temporarily increase APP’s monthly bond purchases, or launch a new plan for the transition period — or slightly extend the crisis plan.” Most likely. Possibility: “It can be said that PEPP gradually decreases slowly.”
