Some Conflicting Views On PEPP Discussions

Commerzbank note that “regarding the ECB’s PEPP, discussions about an earlier end date of reinvestments could gain traction. Note that in the latest SMA survey form conducted by the ECB before the meeting, the PEPP question was changed and is now more explicitly asking analysts when they expect an announcement about the end of PEPP reinvestments. This could be an indication that such discussions are broadening in the governing council.”

• A quick reminder that our policy team has recently flagged its understanding that the “Bank is only likely to begin in-depth discussions over its balance sheet reduction after the conclusion of its operational framework review due by the end of the year, and while the matter is likely to come up at this week's Governing Council, any trade-off between higher rates and further reductions in bond reinvestments or active bond sales is improbable.”