The ECB could reduce the PEPP as early as June. gasoline for Eurosceptics
The European Central Bank could decide to scale back its emergency bond purchase program as early as next month if the euro area economy does not deteriorate, according to Governing Council member Martins Kazaks. A nice, austere announcement that next week risks skyrocketing euro area bond yields.
Kazaks, who also heads Latvia's central bank, said the ECB's commitment to keeping funding conditions favorable remains key to determining how much support the 19-nation bloc needs to recover. Nominal yields on bonds have increased in recent weeks, also due to the slightly rising inflation, but the real ones have remained very low, thus helping the economies that are still limping and are only now emerging from a dramatic situation due to the various lockdown.
"If financial conditions remain favorable, we can decide to buy less in June," Kazaks said in an interview Thursday. “Flexibility is at the heart of PEPP”. An announcement that will make France, Italy and Spain shiver. Currently, Italian ten-year bonds are below one percent.
The ECB believes that the economy is on its way to "Healing", but at what cost? If vaccinations are also on the rise and have even exceeded 25% in almost all EU countries, at the same time the lockdown is still underway in some countries and in any case the tourist and travel flows are very far from being resumed. The European services sector is still in crisis, but the ECB is starting to pull the oars in the boat.
This move should make Eurosceptics happy, because a squeeze on interest rates now, with the European social groups in post-pandemic crisis as well, would be the best political push for those who oppose the Euro and the EU. Unfortunately, the weight of the "Austere" and German satellites is still very strong in the ECB and this will not at all facilitate the survival of the Single Currency.
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article The ECB could reduce the PEPP as early as June. gasoline for Eurosceptics comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-bce-potrebbe-ridurre-il-pepp-fin-da-giugno-benzia-per-gli-euroscettici/ on Sat, 08 May 2021 12:34:34 +0000.