The European Central Bank (ECB) apparently wants to take into account the progress made in combating the Corona crisis and somewhat reduce the pace of its bond purchases.

In the fourth quarter, that is, in the months of October to December, bonds worth billions will continue to be bought, but apparently not quite as many as in the second and third quarters of the year.

That emerges from a communication that was sent on Thursday after the September meeting of the Governing Council.   

Christian Siedenbiedel

Editor in business.

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The communication states: “Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council concludes that favorable financing conditions with a moderately slower pace of net asset purchases under the asset purchase program for the Emergency (PEPP) than can be sustained in the previous two quarters. "

Most recently, the Eurosystem's central banks bought bonds for around 80 billion euros a month from the PEPP crisis program and an additional around 20 billion euros from the longer-term APP bond purchase program.

The central bank left the key interest rate unchanged, and it has not yet indicated a fundamental exit from bond purchases.

She pointed to the improved economic situation in the eurozone, but also did not fail to mention the continuing risks from the development of a pandemic.   

Inflation in the euro zone had risen to 3 percent

Economists like Volker Wieland from the Economic Advisory Council had called for the central bank to be careful not to miss the exit from the ultra-loose monetary policy.

Former ECB chief economist Otmar Issing said the ECB should have signaled long ago that it intended to repay the bond purchases.

In August, the ECB was confronted with a significant increase in inflation in the euro area, which should also make it necessary to raise its own inflation forecasts. However, the central bank has so far argued that these are only temporary phenomena in connection with the corona crisis. According to the national calculation, inflation in Germany rose to 3.9 percent in August, and to 3 percent in the euro zone as a whole. In the meantime, there is no longer a euro zone with a negative inflation rate, in which prices are falling on average. Estonia even has an inflation rate of 5 percent, Lithuania is 4.9 percent and Belgium 4.7 percent. The ECB is pursuing an inflation target of 2 percent - albeit in the medium term: Temporary excesses will be accepted.   

Public statements by central bankers had recently suggested that something could change in bond purchases.

After the US Federal Reserve signaled that it could reduce its bond purchases later this year, there were calls from Europe to do something.

In addition to Austria's central bank chief Robert Holzmann and the Dutch central bank governor Klaas Knot, Bundesbank president Jens Weidmann had also said: He did not want to decide when the central bank will finally exit its crisis bond purchase program PEPP.

So far, the end of March next year is planned.

"So that the purchases don't have to end abruptly, we should reduce them step by step beforehand, if the situation allows," demanded Weidmann.

Financial markets have been a bit nervous lately

After all, there are strong arguments why the central bank could now take things a little easier with its bond purchases. Inflation in the eurozone has risen. In addition, the economy is growing noticeably, not only in Germany, but also, for example, in Italy. And last but not least, the financing conditions for companies and households are good. Last week, ECB Vice President Luis de Guindos signaled that the ECB leadership was not entirely averse to such considerations. He was quite confident about the economic development in the euro zone: "The latest data are very positive."

The question of how the ECB will continue to position itself has recently also preoccupied the financial markets. The nervousness on the German stock market had increased in the past few days. Losses in the German Dax share index were also attributed to the fact that investors held back out of caution. On Thursday the index fluctuated ahead of the ECB meeting. In the morning he lost significantly to 15,460 points, later there was a clear countermovement.