MNI BRIEF:Early PEPP Reinvestment End Talks 'Not Unimaginable'

Discussions on whether to speed up the pace of ECB balance sheet reduction by bringing forward the end of reinvestments from the PEPP asset purchase programme are "not unimaginable," Croatian National Bank boss Boris Vujcic said at an event Wednesday.

PEPP reinvestments are currently expected to run until at least the end of 2024, but policymakers could look to speed up the process, he indicated. However no such discussions have yet taken place, nor has there been any discussions regarding selling bonds bought under the APP, he told the online event hosted by LC Macro Advisors.

The ECB is expected to hike interest rates again later this month, with the outcome of September's meeting still "very open," Vujcic said, adding that he places greater weight on observables such as real activity, lending and inflation data than on survey results. Pausing the hiking cycle at some point is "certainly a possibility," he said. But the ECB won't communicate where it sees the terminal rate, and will continue to stress that it will raise rates again if incoming data call for further tightening.