ECB already starting to shift the focus from PEPP to APP purchases
- APP may need to be recalibrated
- APP would benefit from higher purchase volumes to avoid any cliff effect
- May also benefit from some important flexibility features of PEPP
- There is an upside risk to inflation
- However, current forecasts show inflation undershooting target
- Even with slightly faster inflation than expected, it would fall short of 2%
- Full interview
Expect more talk of this to follow later in the year and as mentioned before, tapering PEPP purchases means little in the grand scheme of things when the ECB is eventually going to upsize its APP purchases next year i.e. the so-called taper without a taper.
