Sunday, August 14

The ECB prepares for tapering with the next season in April 2022

The meeting that the Governing Council of the ECB will hold tomorrow will be somewhat atypical . Not so much for its significance, more than significant at the moment that the economy is living in the midst of the reappearance of COVID-19 with the omicron variant and its multiple mutations. Rather it will be for the positive for coronavirus by the number two of the institution, Vice President Luis de Guindos, showing mild symptoms, after ruling out close contact in the last week with the president of the institution.

Christine Lagarde will therefore not be flanked by the Spaniard in her appearance, but she will certainly be backed by the decision that is adopted and on which economists are already betting. In fact, the Reuters consensus is that tapering will start from next April, very far from the performance of the other central bank of reference, the Federal Reserve of the United States.

And the situation in Europe is very different. Inflation continues to rise exponentially . At the moment with the flash of November, which will be confirmed after the appointment, on the 17th, we see that prices reached an all-time high, the highest in 25 years since there are records, at 4.9% in the Eurozone , with an advance of eight tenths and the rise, again, astronomical in energy, by 27.4%. But it is not the only game, because he at underlying rate , which excludes the most volatile elements , marks 2.5% year-on-year, half a point more.

Evolution of inflation in Europe

But the president of the ECB It was already advanced that the roadmap was not marked by prices, although a hike in his goals is expected after tomorrow’s meeting. And, therefore, the maintenance of stimuli for an economy in the Eurozone that loses steam before the omicron variant, and even before it, and due to the new restrictions in the face of Christmas in the making.

In fact, those surveyed by the agency, compared to what has happened in the United States, that the omicron variant and its impact on the European economy is the main problem leaving in second term, inflation .

Thus, the experts consulted by Reuters see how the meeting will discuss what to do to adapt the regular program of purchase assets, the so-called APP, when the specific plan to fight the pandemic, the so-called PEPP in its acronym in English, ends in March. . Remember that the ECB continues to buy in the order of 80,000 million euros a month in debt within the framework of these two programs. In the case of the emergency plan against the pandemic, 60,000 million and 2,000 more in the purchase of assets.

Evolution of debt purchase levels in ECB programs

Economists consider that after April the global purchase of ECB bonds will reach 40,000 million euros Y it will run until the end of 2022, Some even predict that, without recovery, the relief it provides the intervention of the European Central Bank in the market could extend until mid-2023.

In the specific case of Spain the purchase of assets reaches in figures of the institution up to 35% of the debt Spanish in secondary markets, of which 23% would correspond to the special pandemic PEPP program and 12% to the APP program for the acquisition of national bonds.

A) Yes the rise in interest rates in the Eurozone is much more postponed than in the United States, in a time horizon still distant. The ECB has stressed that there will not be a rise until shortly after the purchase of bonds is stopped, with what the outlook presents as little in 2023 and could be by the end of that year, at least.

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