ECB's Knot: We can flexibly adjust PEPP volumes even within the quarter, if appropriate
Remarks by ECB policymaker, Klaas Knot
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.
- 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
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.