At its next meeting in December, the Governing Council will decide how to proceed with the central bank's bond purchases.

The PEPP crisis program in particular expires in March.

Christian Siedenbiedel

Editor in business.

  • Follow I follow

The head of the Austrian central bank, Robert Holzmann, has now proposed that the entire bond purchases could also be phased out next autumn if inflation develops accordingly and approaches the official target value in the long term;

possibly as early as September next year.

Holzmann promised that at an event in London, as reported by the Bloomberg news agency.

He pointed out that the APP bond purchase program introduced in 2015 was designed to bring the rise in consumer prices back to 2 percent.

"The elimination of the condition and thus the end of the program could come - depending on the inflation trend - in September or at the end of the year," said Holzmann.

"I wouldn't bet a lot of money that inflation will be below 2 percent by the end of 2022."

"No reason for another round"

However, models indicated that inflation would fall below that level in 2023 or 2024, he added.

Holzmann spoke out against changes to the conventional bond purchase program and against a further round of targeted, longer-term refinancing transactions with the aim of getting the banks to lend more to the real economy.

"The data analyzes we have available show that the additional lending effects were very small," said Holzmann.

"I see no reason for another round - the economic effect is small."

In general, such a rapid complete cessation of the ECB's bond purchases is not yet expected. "Even if the crisis program ends on schedule at the end of March 2022, the ECB intends to continue its normal purchasing program until the first rate hike is imminent," said Holger Schmieding, chief economist at Hamburg's Berenberg bank. "We will probably have to wait until spring or summer 2023 for an announcement by the ECB that it will completely stop its bond purchases - we expect the ECB to end its bond purchases in September 2023 and then raise key interest rates for the first time in December 2023."

Jari Stehn, economist at the investment bank Goldman Sachs, has forecast the following schedule: He believes it is unlikely that the central bank will not take any further measures at the end of March next year, when the crisis program expires, and only issue bonds for 20 billion euros a month after the longer-term one Purchase program APP will buy.

"In my opinion there will be a transitional arrangement," said Stehn: "Either the ECB temporarily increases the monthly bond purchases of the APP or introduces a new program for the transitional period - or it extends the crisis program a little bit." last possibility for most likely: “a slow PEPP tapering, so to speak”.