European Central Bank debate plan to curb QE in March

Dec. 09, 2021 10:34 AM ETiShares Core MSCI Europe ETF (IEUR), FXEBy: Liz Kiesche, SA News Editor2 Comments

European Central Bank in Frankfurt

Stephan Behnes/iStock via Getty Images

  • The European Central Bank's policy-setting arm draws up a plan to temporarily increase its regular bond purchase program that would still significantly lower its overall debt purchases when its larger pandemic emergency asset purchase program ends in March, Reuters reports, citing people with direct knowledge of the matter.
  • The euro falls 0.5% against the U.S. dollar, as does the Invesco CurrencyShares Euro Trust ETF (NYSEARCA:FXE). The iShares Core MSCE Europe ETF (NYSEARCA:IEUR) drops 0.7%.
  • The plan will be discussed at the ECB Governing Council's Dec. 16 meeting and is intended to keep bond yields in check as the ECB's EUR 1.85B ($2.09T) Pandemic Emergency Purchase Program (PEPP) ends, without adding too much accommodation when inflation is elevated and the growth outlook unclear.
  • The people told Reuters that policymakers appear to be reaching a compromise to increase the ECB's Asset Purchase Program with limits on the size and time of the commitment. It will still allow the council flexibility to adjust the policy later.
  • The ECB's commitment to the plan doesn't go beyond 2022, they said.
  • Last month, ECB President Christine Lagarde said not to expect rate hikes anytime soon

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