Yesterday the European Central Bank announced it will ‘moderately’ reduce the pace of bond purchases across its Pandemic Emergency Purchase Programme. This will take the number down to around €70 billion per month from €80 billion. They will also continue with €20 billion via their Asset Purchase Programme. The modest reduction comes as a result of the better than expected recovery, which will see the eurozone return to pre-pandemic levels by the end of the year, sooner than expected.
The euro initially gained on these developments but soon gave back its advances. Even though the ECB’s tone was positive, the small change does not yet signify anything meaningful and Madame Lagarde made an explicit point that this was not ‘tapering’ in their eyes.
Today’s an active day on the economic calendar. Across the morning session, we have UK growth data for July and August manufacturing and industrial production. There’ll also be European regional inflation data across the morning and some from the US in the afternoon.
Written by Viv Savani. 7:15am, September 10th 2021
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