ECB Governing Council member Martins Kazaks said that “flexibility is at the very core of PEPP”, referring to the central bank’s Pandemic Emergency Purchase Program. “If financial conditions remain favorable, in June we can decide to buy less.”
He added that there is not reason to believe that PEPP program will extend beyond the March 2022. ECB might even complete the program without using up the entire envelop of EUR 1.85T, depending on economic developments. “The size of the package is not an absolute truth,” he said. “If the economy performs nicely, it’s quite likely that we will not need to spend everything.”
Still,he emphasized that it’s “premature” to talk about stimulus exit due to high uncertainty. “If the inflation outlook remains like the current forecast when PEPP ends, I think we would certainly discuss increasing APP,” Kazaks said.” Monetary policy will remain very accommodative. If necessary we can also devise new instruments.”
