ECB meeting will be a focus today and attention will mainly be on the PEPP purchase plan in Q4. The pace of purchases was significantly higher in Q2 and Q3. But with improvement in economic activities, as well as financing conditions, it’s time for the central bank to re-calibrate the program. Chief Economist Philip Lane sounded cautious as he indicated there could be a “local adjustment” of the program but not a “pure taper situation”. The plan for the emergency purchase program beyond the end date of March 2022 is probably still a bit “far away” for the council members.
New economic projections will be published and there were already some indications on upgrade in growth forecasts for this year. But that could also be offset by a slight downgrade for next year. So the overall impact could be muted. The key is indeed on how ECB views the inflation path. CPI was at a 10-year high of % in August and the projections would show how it will peak and then slow, to reflect how transitory inflation would be.
Here are some previews:
