ASI: Reduction of emergency support main theme at ECB meeting

ASI: Reduction of emergency support main theme at ECB meeting

6 september 2021

ECB
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This is a preview by Paul Diggle, Deputy Chief Economist at Aberdeen Standard Investments, of the upcoming ECB meeting.

"This ECB meeting will be an important one for investors because there is a good chance the Governing Council announces a reduction in the run rate of PEPP asset purchases. A variety of ECB policymakers, from the usual hawks like Jens Weidmann but also including Phillip Lane the chief economist, have been dropping hints that it’s time to dial back a little the pandemic-era emergency policy support."

"Of course, this would come around the same time that the US Fed has been discussing tapering asset purchases, and a number of other major central banks are moving in a less accommodative direction. But even if the ECB announced a PEPP reduction, it will still keep the old APP QE programme running for a long time to come, while there is little end in sight for negative interest rates in the Eurozone."

"So over time the ECB could look like a dovish standout amid the global move towards slightly tighter monetary policy, opening up some interesting investment implications."

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