MNI BRIEF: ECB Bond Buys Hampered By Redemptions

The European Central Bank bought a gross EUR 16.9 billion in govt bonds through the PEPP in the week ended Feb 26, but the net number was skewed lowed by a heavy round of redemptions, totalling EUR4.9 billion. The previous week saw net purchases of EUR 17.3 billion after redemptions totalling EUR1 billion. Overall, the PEPP, PSPP, CSPP and APP saw net purchases of EUR13.7 billion after the near EUR10 billion redemptions in the PSPP and PEPP.

Source: European Central Bank

Earlier, Vice President Luis de Guindos said policymakers were open to recalibrating PEPP to compensate for a rise in nominal yields if the increase has a negative impact on financing conditions. In an interview published Tuesday, he echoed recent remarks by both Isabel Schnabel and Philip Lane, although his assertion that the ECB has both "ammunition" and "room for manoeuvre" suggests an increase in the pace and volume of purchases under the present EUR 1.85 trillion PEPP envelope may be more likely than an increase to the overall envelope in the short-term.