ECB Restarting QE Will Need More Purchase of Private Debt
Comment of the Day

October 25 2019

Commentary by Eoin Treacy

ECB Restarting QE Will Need More Purchase of Private Debt

This note by David Powell for Bloomberg may be of interest.

The European Central Bank is running low on sovereign bonds to buy -- that undermines the credibility of its pledge to keep going until inflation picks up. If inflation takes two years to firm, the ECB could face a shortage of about 60 billion euros ($67 billion) in debt during the next phase of its asset-purchase program. At the present pace, the central bank could run out of bonds in little over a year, according to calculations by Bloomberg Economics. The best way out is to shift the composition of purchases: BE estimates the markets for corporate and covered bonds could easily bridge the gap.

Eoin Treacy's view

The ECB has self-imposed limits of how many bonds from each sovereign it can buy which are based on the relative size of the bloc’s economies.

Click HERE to subscribe to Fuller Treacy Money Back to top