Monday 29 May 2017

ECB set to signal end to QE

The European Central Bank
The European Central Bank

Noah Barkin

The ECB will extend its bond purchases beyond March and consider sending a formal signal after its policy meeting next Thursday that the programme will eventually end, senior sources said.

Even some sceptics of more stimulus on the bank's Governing Council have accepted that an extension beyond the current expiry date of March is inevitable given weak underlying inflation and heightened political risk, they said.

They are still wrestling with the question of how to structure that extension, however, according to multiple senior sources at the European Central Bank and national central banks.

Much of the preparatory staff work has focussed on a six-month extension at a steady pace of €80bn per month, an option favoured by many as growth is sluggish, inflation lacks momentum and political risk from key elections keeps the chances of market volatility high, three sources said.

But some have indicated they would favour an extension but at lower volumes, fearing that a straight extension could make the programme appear open-ended, two of the sources said.

The sources noted that no decision has been made. The ECB itself declined to comment.(Reuters)

Irish Independent

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