A tough decision for the upcoming June policy meeting
Despite the policy meeting this week being a calm one, ECB policymakers are said to expect a tough decision in June - also when the next set of economic projections are released - over whether to start easing PEPP purchases, according to Bloomberg sources.
Talks are expected to be much more complicated and it could be heated with some policymakers ready to argue that PEPP purchases should start to be scaled back as soon as Q3 as the euro area economy is likely to stage a strong recovery in 2H 2021.
Meanwhile, there is word that other members aren't too comfortable with that as they would prefer a more cautious approach that doesn't commit the ECB to staying within the €1.85 trillion envelope, in case the economy remains weak.
I reckon that the vaccine progress in the region over the coming weeks will set the tone for how things are going to play out and if the virus situation remains rather poor (with prolonged restrictions), then any economic optimism will have to be delayed.
