ECB to scale back bond buying, signaling policy shift

30 October 2017

On 26 October 2017, the European Central Bank (ECB) announced that it will cut its monthly bond buying to €30 billion from €60 billion, starting in January 2018.


The new purchase target is set to last until September 2018, but the ECB added that it stands ready to extend the bond-buying program, “if necessary”. Meanwhile, ECB President Mario Draghi and his colleagues kept the benchmark interest rate on the deposit facility at -0.40 percent and reiterated their forward guidance that they “expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.”


The redemption dataset will include the estimated cumulative monthly redemptions for each of the four individual components of the APP, i.e. the asset-backed securities purchase programme (ABSPP), the third covered bond purchase programme (CBPP3), the public sector purchase programme (PSPP) and the corporate sector purchase programme (CSPP), for a rolling 12-month period. These will be accompanied by the historical redemption figures since the start of the APP. The first monthly release will be published on 6 November 2017. The decision to start publishing these data reflects their increasing relevance, given the higher redemption amounts that will be seen in 2018.


The ECB’s announcement on Thursday to scale back its so-called “quantitative easing” marks the beginning of the end of its loose monetary policy as the eurozone economy recovers. ECB policymakers, however, have opted to stretch out the policy amid concerns that the bloc’s inflation rate is still too low. The headline eurozone inflation for September was 1.5 percent — undershooting the ECB’s “just-below-2-percent” target.