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ECB to further taper bond-buying programme

Shilen Shah, Bond Strategist at Investec Wealth & Investment, comments on the ECB’s decision to slash its QE stimulus…

As expected, the ECB announced at its October press conference that it would further taper its bond buying programme from EUR60 billion a month to EUR30 billion a month from January 2018 to September 2018. Despite the announced reduction in stimulus, the Euro has weakened against the USD and is currently down 0.5 per cent on the day as the market tries to digest a gradual reduction is stimulus with the ECB’s open-ended commitment to extend the bond buying programme “beyond” September 2018 “if necessary.
Overall, it looks like the European Central Bank is aiming to slowly reduce the amount of stimulus its providing to the market, whilst cushioning the market’s reaction given the central bank’s concern that a stronger Euro has the potential to compress Eurozone CPI.

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