Tue, Oct 26, 2021 @ 05:09 GMT
HomeLive CommentsECB Muller: We should be able to end PEPP in March

ECB Muller: We should be able to end PEPP in March

ECB Governing Council member Madis Muller said, “given the recovery that we’re seeing in the economy, also the outlook for inflation and most importantly the extremely favorable financing conditions that we continue to have in the euro area, we should be able to end PEPP in March as it has been communicated and as it has been the original plan.” He added, “if you ask what is the most likely outcome then to me personally, this is the base case.”

Muller also argued that inflation could start stronger than ECB’s forecasts. “Looking at possible factors that could be pushing prices higher and those that could be pulling it lower, the factors pushing prices higher seem to be stronger at the moment,” he said. “It’s more likely that we will have inflation, for example, in 2023 higher than 1.5% rather than lower. The same probably applies for the 1.7% inflation forecast for 2022.”

However, “it would be a problem if there is a very sharp cliff effect at the end of the pandemic emergency purchase program,” he noted. “”part of the discussion we will have on how to phase out PEPP and what it would mean for asset purchases going forward.” A potential increase in the APP program was being discussed. But, “of course the decision will depend on market conditions next spring and the economic outlook at that point.”

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