ECB commits to bond purchase pace

ECB chief Christine Lagarde pledged ‘higher pace’ for the programme. Photo: Olivier Matthys/Reuters

Sarah Collins

April 23 2021 02:30 AM

The economic outlook for the eurozone is “clouded by uncertainty” due to the vaccine rollout and a resurgence of Covid-19, the European Central Bank said.

The ECB kept its main interest rates on hold yesterday and announced it will continue its emergency bond purchases “at a significantly higher pace” during the second quarter, as announced in March.

“We still have a long way to go until we’ve crossed the bridge of the pandemic and the recovery is sustainable and solid,” said ECB president Christine Lagarde.

In March, the bank agreed to ramp up its sovereign bond buying to offset a rise in sovereign yields.

After a monetary policy meeting, Ms Lagarde said the bank had not discussed phasing out the extra bond buying and that it was “premature” to do so.

“There has been a clear and significant increase in that pace of purchase and it will continue to be that way.

“We need to continue those purchases at this significantly higher pace than during the first two moths of 2021.”

She said the ECB would base any phase-out of the increased purchases on data, including inflation and bank “financing conditions”.

The ECB’s government bond buying rose by €28.4bn last week, compared to the previous week, with purchases now at similar levels to what they were at the height of the pandemic last July, Ms Lagarde said.

As of the end of March, the ECB held €14.1bn in Irish sovereign debt.

The ECB’s next rate meeting is on June 10, when it will also publish its economic forecast.