ECB debated smaller stimulus package: accounts by Reuters

© Reuters. FILE PHOTO: ECB headquarters in Frankfurt

FRANKFURT (Reuters) – European Central Bank lawmakers debated a minor spike in emergency bond purchases last month and were willing to emphasize that they may not spend the full quota, accounts from their December 10 meeting showed. Thursday. Facing a new recession amid widespread lockdowns, the ECB approved new stimulus measures at the meeting, hoping to keep borrowing costs low until the bloc is ready to reopen. “It was argued that the focus on preserving favorable financing conditions implied a move away from a constant monthly rhythm of purchases towards an adjustment of the rhythm according to market conditions,” the ECB said. “This approach, combined with strong communication, could allow the Governing Council to reduce the pace of purchases and, at the same time, have an equivalent effect on financing conditions,” the policy makers said, according to the accounts. Restrictions in everyday life have become increasingly burdensome, even in the last month, challenging growth assumptions and increasing the risk of recovery, it would be further delayed. But ECB President Christine Lagarde argued this week that uncertainty is actually diminishing and even if the pandemic presents short-term challenges, the overall outlook has not changed. ECB politicians began discussions ahead of the December meeting with a proposal to buy additional bonds worth 750 billion euros before settling for half a trillion euros on Thursday, sources told Reuters at the time. “Several members advocated for a more moderate increase in the PEPP envelope on the grounds that there was still significant purchasing space available from past decisions and that in an environment of high uncertainty it was worth ‘keeping a little dry dust, ‘”he added. added the ECB. The ECB will meet on January 21 and policy makers are expected to reaffirm the bank’s ultra-easy policy, which includes purchases of 1.85 trillion euros of bonds as part of the Pandemic Emergency Purchase Program until March 2022.

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