ECB’s Centeno: Hopeful That Coming Quarters Show PEPP Envelope Appropriate

16 March 2021

By David Barwick – FRANKFURT (Econostream) – Coming quarters will hopefully show that the European Central Bank’s increase in December of the pandemic emergency purchase programme (PEPP) envelope was appropriate, ECB Governing Council member Mario Centeno said Monday .

In an interview with Reuters, Centeno, who heads the Bank of Portugal, said of the purchase amounts under the ECB’s ‘quite successful’ PEPP that ‘the decision is going to be taken on a monthly basis, because we can adapt the baseline amount up or down depending on market conditions.’

‘We now continue to be hopeful that the second and third quarters will prove that the trajectory was right, and if that happens, then the decision that we took in December about the [PEPP] amount is appropriate’, he was quoted as saying.

‘No one challenged that in our debates’ at last week’s meeting of the Governing Council, he said.

Centeno urged that authorities be ‘humble’ when trying to gauge the outlook. ‘Hopefully we can all look at the numbers and say, “Hey, the summer was OK, the services sector across Europe has been able to guarantee cash flows to get into the future in a much stronger position.” This is not the case yet’, he said.

Although central bankers are ‘quite happy with the impact of PEPP’, he said, ‘the second and third waves of the pandemic show us we are still under emergency procedures, not yet out of the woods, we are very far from that yet and we must keep all our policies actively in place.’

He reiterated his opposition to yield curve control, saying he ‘would not support its strong implementation’. As ‘we are quite happy with the way our policies are responding to the crisis’, he said, ‘I don’t see a reason for us to change that.’

If the need to give serious consideration to yield curve control were to arise, the ECB would do so, ‘but honestly I don’t see that happening’, he said.