Many ECB policymakers reportedly open to increase APP purchases to avoid cliff effect

Author: Justin Low | Category: Central Banks

Reuters reports, citing sources familiar with the matter

ECB
The report says that policymakers at the ECB are seeing the risk of inflation being more "sticky" and exceeding projections, with some anticipating inflation to be at 2% or above next year - which should pave the way for an end of PEPP purchases in March.

Most policymakers at the central bank are said to be of the opinion that the latest inflation forecasts were too low and that presents a challenge to the ECB view that inflation is going to be undershooting the 2% target for years to come.

The sources pointed to supply bottlenecks lasting longer than expected and staff shortages as being key reasons for that (what a shocker.. not!).

However, even in this instance, many policymakers are said to be open to a temporary increase in APP purchases next year to avoid a "cliff effect" from the end of PEPP - with some saying that they could go with a pace of €40 billion per month (currently €20 billion).

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