ECB unlikely to consider prematurely winding down bond-buying
But despite the high level of media attention – particularly in Germany – the
ECB is unlikely to consider prematurely winding down its bond-buying
programme.
The core inflation rate – i.e. The change in the price of consumer
goods excluding volatile items such as food and energy – remains virtually
unchanged at around 1% both in Germany and across the eurozone. For the
core inflation rate to increase, high wage growth is needed. As in recent years,
wage growth is likely to be around 2% in Germany – despite full employment.
Despite the recent increase in overall inflation, it therefore seems unlikely that
the ECB Governing Council, at its March meeting, will be willing to signal a
tapering of its bond purchases. In the best-case scenario, it will formulate more
specific conditions under which the bond-buying programme could be reduced.
As before, we expect the ECB to announce a scaling back or modification of its
bond purchases in June at the earliest.
However, it is probable that the ECB’s
comments in March will hint at a slight shift in emphasis.
EU Forecast
euf:ba18.c:191/nws-01