Will the ECB slow the pace of its bond buying?
A surge in inflation as the eurozone economy stages a rebound from the Covid pandemic has raised the possibility that the European Central Bank could begin to dial back its emergency stimulus efforts as soon as this week.
Investors have already begun to price in the possibility of a “tapering” of ECB asset purchases following a series of public comments by policymakers hinting such a move may be on the cards at Thursday’s meeting, which comes on the heels of the fastest rise in consumer prices in the bloc for more than a decade.
Silvia Ardagna, chief European economist at Barclays, said she expected the ECB to trim its monthly bond purchases under the pandemic emergency purchase programme (PEPP) to €60bn-€70bn a month, from the current rate of €80bn. Ardagna also expects the central bank to raise its growth and inflation projections.