As the European Central Bank limbers up to restart its debt-buying programme, one question looms large for investors: how long can the purchases continue before the bank runs out of bonds to buy?
The ECB is due to start acquiring €20bn of bonds a month in November, just a few days after this Thursday’s policy meeting — Mario Draghi’s last as president, before handing over to Christine Lagarde. Analysts estimate that the quantitative easing programme can run until the end of next year before bumping up against the central bank’s self-imposed limits, under which it can own no more than a third of any eurozone country’s bond market.
But things could quickly get tricky for Mr Draghi’s successor. If the current downturn intensifies and the central bank wants to increase its stimulus, the thorny question of raising this limit would have to be tackled much sooner.