ECB: Recovery Threatens the Recovery, We Must Devalue the Euro

Bloomberg: ECB Ramps Up Bond-Buying Speed to Contain Rising Bond Yields

The European Central Bank pledged to ramp up buying government debt in coming months in a bid to a contain rising bond yields that threaten to derail the region’s economic recovery.

Policy makers expect purchases in the next quarter “to be conducted at a significantly higher pace than during the first months of this year,” according to a statement on Thursday. They kept the overall size of the 1.85 trillion-euro ($2.2 trillion) pandemic bond-buying program unchanged.

What kind of recovery is threatened by a recovery in bond yields? Answer: a fake one.

Market Insider: ECB To Accelerate Bond Purchases In Q2

In December, the PEPP envelope was boosted by EUR 500 billion and the horizon for net purchases under the scheme was extended to at least the end of March 2022.

The bank said it will not use the PEPP provision in full if favorable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over its net purchase horizon.

The PEPP purchases can be recalibrated if required to maintain favorable financing conditions to help counter the negative pandemic shock to the path of inflation, the ECB said. The bank will continue to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2023. The future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance, the bank said.

The size of the asset purchase program was also maintained. The monthly EUR 20 billion worth of asset purchases would continue as long as necessary, the bank said.

These will end shortly before the Governing Council starts raising the key ECB interest rates, the ECB said.

The Governing Council kept the main refi rate unchanged at a record low zero percent and the deposit rate was left at -0.50 percent. The lending rate was held steady at 0.25 percent.