European Central Bank tapers PEPP purchases but retains flexibility
The ECB took significant steps to tighten its highly accommodative policy stance over the course of 2022 on the back of upwardly revised growth and inflation projections.
What you will learn:
- Net asset purchases under the PEPP will slow in Q1 and end in March.
- Net asset purchases under the APP will temporarily rise to €40bn per month in Q2 and €30bn in Q3 before returning to €20bn thereafter.
- The bar to ending QE net purchases seems lower now as the temporary top-up of the APP only lasts six months and the new headline and core inflation forecasts are close to target at 1.8% in 2024.
UK: Sterling’s woes, Kwarteng’s vows, Bailey in the middle
The negative market reaction to last week's fiscal announcements appears to be a function of doubts over the credibility of the UK government's long-term fiscal plans. Though we think the structural position is not as bad as last Friday's drop in asset prices implies, it's clear the government will struggle to retain credibility if it fails to engage with market concerns.Find Out More
BoJ to look through a temporary decline in monetary base
The Bank of Japan (BoJ) left monetary policy unchanged at today's (22nd Sep) meeting, maintaining current short- and long-term interest rates, despite another wave of yen weakening and upward pressures on JGB yields.Find Out More