RTRS: ECB governors mull delaying call on future bond buys as outlook murky
Divergences are EVERYWHERE and markets are forward looking and instructive not ONLY to traders and investors BUT central planners, too. Reuters headline, and excerpt follows. The entire story worth a CLICK
ECB governors mull delaying call on future bond buys as outlook murky
Some want to push back decision on life after PEPP
Omicron, rising inflation muddy outlook
Unused firepower, new envelope among options
…DEVIL IN THE DETAIL
So far the ECB has stuck to its line that inflation was mostly driven by temporary factors such as higher energy prices, supply bottlenecks and base effects from last year's slump.
But the camp of policymakers seeing growing risk that inflation would settle at or above target in 2023 was growing, the sources said.
Policymakers have anyhow yet to find an agreement on how to smooth out the end of PEPP, with the debate likely to start at Wednesday's seminar.
Some policy hawks do not see a need to add to the ECB's six-year-old Asset Purchase Programme, which is running at 20 billion euros a month. They think that deploying proceeds from maturing PEPP bonds flexibly should suffice to tame any sign of market stress.
This option is not likely to find support, however, according to the sources.
Others want to at least retain any unused PEPP firepower, which could total 100 to 200 billion euros, to deploy it after March.
Others still favour creating an "envelope" of cash that can be spent to buy bonds as and when needed over a fixed period of time, much like in the case of the current emergency scheme.
Remaining options include adding a fixed amount of money to the APP's monthly pace or launching a new programme altogether.