The ECB has just dropped the previously included suggestion that the asset purchase programme might be expanded.
“The ECB changing its tune on bond purchases is a welcome development. This announcement suggests that we may finally be about to see the long-awaited phase-out of the purchase programme. This message from the ECB is particularly helpful coming just days after the Italian election.
The strong performance of populist parties in Italy’s parliamentary elections has created increased uncertainty over the country’s economic recovery. The ECB is now making it clear that its monetary policy is not designed to suit the particular circumstances of Italy but for the Eurozone as a whole. This is an important message to send to the next Italian government; namely that the ECB will not help to finance irresponsible financial policy.”
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