ECB: Purchases via the PEPP program planned to be significantly more extensive in the 2nd quarter
The European Central Bank (ECB) wants to increase the pace of its bond purchases in order to curb the recent rise in the yields of government bonds of the euro countries. Central bank chief Christine Lagarde and the other council members announced on Thursday after the interest rate meeting that the purchases as part of the PEPP purchase program will be significantly more extensive in the next quarter than in the first few months of the year.
However, the European Central Bank did not decide on a new support package for the economy. It was not until the end of 2020 that it expanded its economic aid again and, among other things, increased the purchase framework of the PEPP program again. The central bank also left the key interest rate at its record low of 0.0 percent. It has been there since March 2016.
Recently, the yields on government bonds of the euro countries climbed sharply. This had raised concerns among some council members that borrowing costs in the euro area could increase undesirably. In the middle of the pandemic, that would come at an inopportune time for the central bank. It had promised to continue to ensure low financing costs for the economy. It is expected that Lagarde will shortly comment on the increased yields at the press conference. Greece's central bank chief Yannis Stournaras had called for the ECB to increase the pace of its pandemic bond purchases.
