FRANKFURT (Reuters) – European Central Bank policymakers debated a smaller rise in emergency bond purchases last month and wanted to stress that they may not spend the full quota, accounts of their Dec. 10 meeting on Thursday.
Opposing a new downturn amid broad lockouts, the ECB agreed new stimulus measures at the meeting, hoping to keep loan costs heavy until the block is ready to reopen.
“It has been argued that the focus on maintaining favorable financing conditions would mean a shift away from a steady monthly pace of purchase towards the pace of change in market conditions,” said the ECB.
“This approach, combined with strong communication, could allow the Governing Council to reduce purchasing speeds while having a similar impact on funding conditions,” policy makers said, according to the accounts.
Restrictions on daily life have become increasingly heavy even in the past month challenging growth assumptions and raising further risk increases.
But ECB President Christine Lagarde said this week that uncertainty is waning and even though the pandemic presents near-term challenges, the overall outlook has not changed.
ECB policymakers began talks ahead of the December meeting with an additional 750 billion euros worth of bond purchases before falling for half a trillion euros on Thursday, sources told Reuters at the time.
“A more moderate increase in the PEPP envelope was suggested by a number of members based on the argument that there was still plenty of room to buy from previous decisions and that it was worth ‘keeping a little powder dry’ in an environment full of uncertainty. ” the ECB added.
The ECB will meet next year on 21 January and policymakers are expected to reaffirm the bank’s ultra-easy policy, including 1.85 trillion euros worth of bond purchases as part of the Pandemic Crisis Purchase Program through March 2022.
Reciting with Balazs Koranyi; Edited by Francesco Canepa