HSBC on the European Central Bank QE program

The debate about the likely pace of QE continues to intensify in the run-up to the 26 October ECB meeting

  • Bloomberg reports that ECB officials believe there is a EUR2.5tn limit to the size of the programme.
  • This would imply a possible EUR220bn of purchases available beyond December 2017, and so the question is how to spread them out.

Our economists believe the central bank will choose to slow the purchase pace to EUR40bn from EUR60bn per month for an additional six months.

If the ECB officials are correct then this would mean the pool of bonds would be used up beyond that point. Bloomberg also reported that the officials are concerned investors may be reluctant to sell assets and that limiting monthly purchases to EUR25bn per month may address some of those concerns.

Long story short from HSBC ...

  • Likely scale of ECB tapering a focus as central bank reportedly frets about pool of bonds available to buy

I doubt there is much this guy frets about