ECB far from pull back on stimulus measures, global markets roiled on mere ‘taper talks’
At its policy meeting on September 3, the ECB kept stimulus package unchanged and left the question unresolved of whether bond purchases will be extended, leaving investors guessing on when and how the program will end.
The European Central Bank (ECB) Quantitative Easing is scheduled to end in March 2017. President Mario Draghi has repeatedly said that QE will run until the end of March 2017 or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
A Bloomberg report on Tuesday citing undisclosed ECB officials said that the ECB will probably gradually wind down bond purchases before the conclusion of quantitative easing, and may do so in steps of 10 billion euros ($11.2 billion) a month. Markets were rattled by the report.
The euro and German Bunds witnessed sharp moves. The euro was down 0.6 per cent against the dollar on Tuesday at $1.1138, but pared losses to $1.1238 before steadying at $1.1203 in late trade. On Wednesday the major was up 0.18 percent at 1.1221 at around 0815 GMT.
Nonetheless, there has been no formal talk on whether to extend — or taper — asset purchases. Neither the ECB’s governing council nor its executive board, composed of the bank’s top six officials and headed by president Mario Draghi has discussed the matter yet.
The council is currently meeting in Frankfurt, but the topic of QE is not on the agenda. The ECB is expected to make a decision on how it plans to continue with QE past the current end date of March 2017 around the turn of this year.