The European Central Bank is slowing its bond purchases.

Is that a sensation?

No.

In a survey of economists before the meeting of the Governing Council, a majority had expected this step.

And yet, ECB President Christine Lagarde and the ECB Council intended this as a signal that the rise in inflation and one's own inflation forecasts are not to be taken lightly.

This is important: economists like Volker Wieland from the Council of Economic Experts are right to warn that the ECB must be careful not to miss the exit from the ultra-loose monetary policy.

Fear of having a panic reaction

After all, inflation in the euro area climbed to 3 percent in August. Even higher rates are likely to be expected by the end of the year. It is plausible that inflation will weaken again next year, when all kinds of special factors related to the pandemic expire. But surprises in the past make one wary of whether this can be predicted with such precision. Among other things, it is unclear whether the unions are willing to forego inflation compensation in wages by referring to the special factors. The pressure on workers will increase the more they feel the loss of purchasing power in everyday life, in prices in the supermarket, at the petrol station or in rents.

Understandably, the ECB is still unsure how the Corona autumn will end. However, it is once again evident that major interventions such as the PEPP bond program are easier to introduce than to abolish. Fear of a panic reaction in the markets after withdrawal of support seems to outweigh concern about the side effects of excessive use. Many economists now accept bond purchases as a monetary policy instrument for crises - but the dangers of continuous use should not be underestimated. Bundesbank President Jens Weidmann rightly warns that the first “P” in the abbreviation for the crisis program PEPP (“Pandemic Emergency Purchase Program”) stands for “pandemic”, ie belonging to the pandemic, and not for “permanent” in the sense of permanent.