The European Central Bank could end its emergency stimulus scheme. Austrian central bank chief Robert Holzmann said that the markets may be right in not pricing in an increase in more traditional bond purchases.
With the pandemic now receding, Analysts, including the ECB’s own Survey of Monetary Analysts, are expecting the 1.85 trillion-euro Pandemic Emergency Purchase Scheme to end next March. This is because the pandemic is now receding and also saw no increase in volumes under the Asset Purchase Program (APP) to compensate for the lost stimulus. ,” Holzmann, who sits on the ECB’s rate setting Governing Council said that this is how the market sees this and he thinks that the market gives the right assessment. They don’t know yet but at the moment it looks like the end is in March. He also mentioned the option of modifying the Asset Purchase Program.
When the pandemic is over, the exceptional stimulus must end up. But the ECB support via other schemes will keep on continuing. In the roundtable discussion organized by UBS, Holzmann also said that they still have other programs such as the APP, which can continue, changed or unchanged. The ECB will next conduct a deeper assessment in September, when new staff projections are made, as this pandemic is far from over and also keeps changing the timeline often.
