ECB Executive Board member Isabel Schnabel said in a speech, “asset purchases were an “indispensable monetary policy instrument during times of market stress and economic downturns”. It also helped to “bolster confidence and shore up the economy and the inflation outlook” after calming the markets.
“As economic conditions begin to normalise and the inflation outlook improves,” she said, “there is a gradual shift in the way asset purchases benefit the economy as the portfolio rebalancing channel makes way for the signalling channel.”
“Asset purchases can increasingly serve as a powerful commitment device, reinforcing forward guidance and reducing uncertainty around the future course of monetary policy.”
She concluded, “given the remaining uncertainty regarding the pandemic and the economic and inflation outlook, our asset purchases – both under the PEPP and the APP – will remain crucial in the time to come, paving the way out of the pandemic and towards reaching our inflation target.”
