ECB: Policymakers needed to avoid giving impression of being overly focused on bond yields

ECB releases the account of its March policy meeting - 8 April 2021

• March statement

• It was observed that rise in bond yields occurred mostly on account of higher expected inflation and a better outlook for the global economy
• In this context, it was remarked that the Governing Council needed to avoid giving the impression of being overly focused on sovereign yields or reacting mechanically to a set of indicators of financing conditions
• There was wide agreement that PEPP purchase pace needed to take into account assessment of current financing conditions and the inflation outlook
• There was a broad consensus on the understanding that the total PEPP envelope was not being called into question in the current conditions and that the pace of purchases could be reduced in the future
• Members agreed that the Governing Council would undertake a quarterly joint assessment of financing conditions and the inflation outlook in order to determine the pace of purchases needed to keep financing conditions favourable
• Full release

Those are the key details at first glance but despite the pushback against rising yields, it seemed like they wanted to walk a tighter line with regards to communicating that to the market. In any case, their commitment to "significantly" step up PEPP purchases will be the key thing being scrutinised now and so far they look to be stepping up talk of tapering rather than actually increasing the pace of purchases in the past few weeks.