ECB's Knot: We can flexibly adjust PEPP volumes even within the quarter, if appropriate

Author: Justin Low | Category: Central Banks

Remarks by ECB policymaker, Klaas Knot


  • If baseline projections hold up, ECB can start phasing out PEPP from Q3
  • May look to end purchases in March 2022
  • There is good reason to expect robust recovery in 2H 2021
  • Comfortable with current level of financing conditions
  • The end of PEPP is not the end of ECB accommodation
  • Sees no case for modifying other instruments like QE or forward guidance
Putting the headline aside, those are quite hawkish remarks but then again it is Knot - he is known to be one of the more hawkish members on the governing council.

I don't think they would like to put a firm date on when the phase out PEPP yet so take these words with a pinch of salt. But if we do see a stronger performance in the euro area during the second-half, perhaps we can revisit this again in the months to follow.
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