ECB, OMT, TPI, QT and The Pandemic Emergency Purchase Programme

It might be time to consider a pause in unwinding the ECB’s pandemic-era asset purchasing programme

The ECB’s toolkit has since the euro area debt crisis been expanded to deal primarily with unwarranted widening of euro sovereign bond yields relative to the German benchmarks,

with notably the Outright Monetary Transactions and the Transmission Protection Instruments schemes. 

Neither tool has been used, but there is little doubt about their effectiveness.

OMT is the 2012 scheme to buy government bonds in potentially unlimited amounts if needed. It was the delivery on Mario Draghi’s July 2012 promise to do “whatever it takes”

TPI allows the ECB to buy the bonds of a Eurozone country if is suffering from an increase in its borrowing costs beyond the level justified by economic fundamentals.

 Pausing so-called quantitative tightening 

— the unwinding of the long-running programme of bond buying to lower the costs of borrowing in order to stimulate the economy — 

That could ease upside pressures on the premiums placed on longer-term bonds across the euro area over short-term debt.

A further avenue for the ECB involves its Pandemic Emergency Purchase Programme

Michala Marcussen group chief economist at Société Générale FT 24 March 2025

https://www.ft.com/content/0573f612-7780-4d41-a038-6c6abf8dd3aa

Tillbaka till Rolfs länktips 24 mars 2025; Konspiratörerna Bristande ryggrad Landerholm Argentina Lagarde

https://englundmacro.blogspot.com/2025/03/rolfs-lanktips-24-mars-2025.html