APP Holdings See Fastest Decline Yet As ECB Eyes PEPP Talks

ECB net purchases of securities held for monetary policy purposes came in at negative E10.0bln last week, the 8th consecutive weekly drop though a more moderate one than the E18.9bln recorded in each of the previous two weeks.

• The biggest drop was as usual in the PSPP portfolio (-E8.2bln, vs -E16.7bln the week prior), with covered bond, CSPP, and ABS net holdings all declining.
• The E9.1bln total decline in APP holdings brings the 4-week rolling total to E51.0bln, above the expected longer-run average uncapped runoff rate of E25-30bln, and the most rapid monthly pace seen since uncapped APP runoff began in July.
• Net PEPP purchases came in at negative E1.0bln (E2.8bln in purchases less E3.8bln in redemptions) last week.
• While changes in the ECB's balance sheet plans are not imminent, Croatian National Bank governor Vujcic told MNI last week that the Governing Council would discuss the future of PEPP reinvestments before the end of 2023, adding that a final decision may take some months.
• Austrian National Bank Governor Holzmann told MNI and others on Monday that while informal talks have taken place, a final decision is only likely to come next year with the finalisation of the ECB's strategic review of its operational framework.