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MNI ECB Preview - December 2021: Recalibration Potentially Short on Details

A Recalibration Potentially Short on Details

  • PEPP is likely to end in March, with a beefed-up APP smoothing the transition from the emergency phase to the recovery phase.
  • How much of this will get announced in December is unclear given heightened uncertainty over growth and inflation, in both directions.
  • It is a close call, but we err on the side of the ECB seeking to retain some optionality by pre-committing to ending PEPP and using the APP flexibly (perhaps by pursuing quarter-by-quarter decisions on purchase volumes), without specifying at this stage exact target volumes or potential envelope size.
  • Whether or not the mechanics of the ‘transition purchases’ are unveiled in December or February, a monthly APP purchase rate of EUR30-40bn/month for six months, or a ~EUR60-120bn purchase envelope on top of the existing EUR20bn/month purchases would be in the right ball park.
For the full publication please see:


ECB Preview December 2021.pdf

Central Bank PreviewECB - PreviewCentral Bank ReportsMarkets
Central Bank PreviewECB - PreviewCentral Bank ReportsMarkets

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