The ECB has cut back its bond purchase programme, but has no plans to end the programme in 2018.
“This reduction in the amount of bond purchases was long overdue given the strong recovery of the Eurozone, but this measure still doesn’t go far enough. The ECB is buying too much and for too long a period of time. The announced purchase of government bonds totalling around a further 225 billion euros in 2018 is particularly problematic.
This will make 2018 the fourth year in a row in which the ECB has introduced more capital to the European government bond market than all the EU Member States need to finance their deficits. With every passing month, the fact that the ECB is now only finding sufficient volumes for its purchases in Member States with the highest levels of debt is becoming more and more of a problem. We can therefore expect to see the shares of ECB bond purchases of Italy, France and Spain continue to grow. This will all give ammunition to critics who accuse the ECB of engaging in monetary budgetary financing under the guise of monetary policy.”
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