ECB’s Kazimir: Acceleration of PEPP Purchases a Reaction to Spillover from U.S.

17 March, 2021

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s decision last week to pick up the pace of asset purchases under the pandemic emergency purchase programme (PEPP) was a response to the effects of the new U.S. fiscal stimulus, ECB Governing Council member Peter Kazimir said on Tuesday.

In an interview with Bloomberg, Kazimir, who heads the National Bank of Slovakia, said that the recent increase in sovereign bond yields of the euro area wasn’t ‘dramatic for now’, but that the ECB needed to take into account what is happening in the U.S.

‘My concern is that, compared with the enormous U.S. fiscal impulse, the effects of the European one will kick in with a major delay - we’re talking months and years’, Kazimir was quoted as saying. ‘The joint fiscal reaction is lagging behind and needs to pick up its pace to support the recovery.’

He characterised the promise by the ECB to ‘significantly’ accelerate the pace of PEPP purchases as ‘a reaction to the spillover of the market move triggered by the approval of the U.S. fiscal package’.

‘With a gradual economic revival, and with generally improving situation, the market rates will naturally react’, he said. ‘What’s important is that such an increase reflects economic fundamentals and that there aren’t some speculative, unwarranted moves.’