The European Central Bank could end its emergency stimulus scheme next March and markets may be right in not pricing in an increase in more traditional bond purchases, Austrian central bank chief Robert Holzmann said on Monday.
With the pandemic now receding, analysts, including the ECB’s own Survey of Monetary Analysts, expect the 1.85 trillion euro Pandemic Emergency Purchase Scheme to end next March and see no increase in volumes under the Asset Purchase Programme (APP) to compensate for the lost stimulus.
“This is how the market sees this and I think the market gives the right assessment,” Holzmann, who sits on the ECB’s rate setting Governing Council said. “We don’t know yet but at the moment it looks like the end is in March.”
The exceptional stimulus must end when the pandemic is over but ECB support via other schemes will continue, and Holzmann even mentioned the option of modifying the Asset Purchase Programme.
“We still have other programmes there, the APP, which can continue, changed or unchanged,” Holzmann, one of the more conservative ECB policymakers, told roundtable discussion organised by UBS.
The pandemic is far from over, he added, so this timeline could still change and the ECB will next conduct a deeper assessment in September, when new staff projections are made.