Quantitative easing is losing importance, according to the European Central Bank

eu, european commission, brussels

The volume of bonds purchased is becoming less and less important. Isabel Schnabel, Executive Board member of the European Central Bank, said this was a reference to the euro area’s improving economic outlook and rising inflation.

The European Central Bank has already reduced the volume of asset purchases under the Pandemic Contingency Program (PEPP), which is expected to end in March next year. According to Schnabel, it turns out that it is no longer as important what volume of bonds the European Central Bank will buy, or whether and by how much it will reduce it, as when similar programs will be completely shut down.

“It is the end date of the program that signals that the conditions for raising interest rates are a little closer. Of course, the precise timing of the downturn and termination will require care when it’s really time, “said Isabel Schnabel, according to Reuters.

It is expected that a decision on when quantitative easing support programs will end could be made in December this year. Inflation in the euro area rose to three percent year on year in August. This is a percentage point above the ECB’s long-term target. And the prospects for economic recovery are still favorable.


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