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ECB accounts: Conducting PEPP purchase at a significantly higher pace in Q2 was proportionate

In the accounts of March ECB monetary policy meeting, it’s noted that the decision to conduct PEPP purchases at a “significantly higher pace” during Q2 was “proportionate in the light of the ECB’s mandate, balancing increased optimism about the medium-term outlook against the considerable uncertainty that still prevailed in the shorter term.”

The decisions would “send a strong signal that the Governing Council wanted to lean against the tightening of financing conditions”. Yet, it was remarked that the Governing Council needed to “avoid giving the impression of being overly focused on sovereign yields or reacting mechanically to a set of indicators of financing conditions.”

Overall, there was “wide agreement” in the council that purchase pace needed to “take into account a joint assessment of the favourability of current financing conditions and the inflation outlook”. The council would undertake a “quarterly” joint assessment of financing conditions and the inflation outlook in order to determine the pace of purchases needed to keep financing conditions favourable.

Full accounts here.

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