Today is an important day for the European Central Bank. They must decide whether to maintain their current level of bond-buying under PEPP (Pandemic Emergency Purchase Programme). The eurozone has performed relatively well in the 3rd quarter of 2021 and has managed to control the infection rate across the region well. 2 weeks ago the region printed its highest inflation read in over a decade, coming in above the 3% mark.
All of the above factors will feature in the decision-making process of the ECB. The real question from their perspective is whether they believe this recovery is sustainable. If they do then the natural response would be to take their foot off the gas in respect to printing more money and adding to their already enormous balance sheet. On the other hand, if the governing council is nervous about what lies ahead then they may take their cues from the Fed and opt to wait a little longer. The decision is out at 12.45 pm with the accompanying press conference commencing at 1.30 pm.
Written by Viv Savani. 8:19am, September 9th 2021
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