ECB compromise on bond-buying might be brokered by summer lull – Bloomberg

Early Wednesday, Bloomberg came out with an analytical piece suggesting the reduction in the European Central Bank’s (ECB) bond-buying, terming it seasonal though.

The ECB “has slowed purchase pace each August since 2015” said the piece while highlighting the inflation outlook as the key for future Pandemic Emergency Purchase Programme (PEPP) for the June meeting.

“Ever since a decision in March to temporarily step up bond-buying to ensure yields and credit rates remain low across the 19-nation euro area, some policymakers have argued that a strong economic rebound from lockdowns and an improving inflation outlook will allow the ECB to reverse course in the third quarter,” said Bloomberg.

Additional comments…

The most important ingredient in June’s policy discussion will be updated projections for growth and inflation that are currently being compiled.

That last set showed consumer prices growing at an average annual pace of just 1.4% in 2023, far less than the ECB’s goal of below, but close to, 2% -- and not yet back on the pre-pandemic track.

FX implications

With this report, market players have an extra filter to analyze today’s US inflation data and its impact on the EUR/USD. That said, the currency major pair traders near 1.2130, down 0.18% intraday, by the press time.