ECB’s Holzmann: Can Hopefully Reduce PEPP Purchases Starting Next Quarter

8 April 2021

By David Barwick – FRANKFURT (Econostream) – Asset purchases under the European Central Bank’s pandemic emergency purchase programme (PEPP) can hopefully be reduced next quarter, Governing Council member Robert Holzmann said on Tuesday.

In an interview with CNBC, Holzmann, who heads the Austrian National Bank, noted that the extension of the PEPP in December also involved ‘a change by changing from a volume which needs to be spent, to a volume which can be spent, and if need be, increased.’

‘So what amount of money will be spent is dependent on the quarter in advance, and the decision for the third quarter we’ll make at the end of the second quarter, and hopefully by that time there will be a possibility to reduce again the purchases’, he said.

The PEPP’s built-in flexibility can be used ‘if you need it’, he said. ‘If there’s no need for flexibility, you don’t use it. Because at the end of the day the capital key should be respected.’

Given that there were ‘not high differences between the countries’, he said, PEPP purchases did not have to be conducted ‘in an asymmetric manner, which is good news’.

Holzmann said that ‘[d]efinitely there are concerns the vaccination may not happen as quickly as we had hoped’ and with respect to medical issues concerning one of the chief vaccines, observed that ‘what happened to AstraZeneca can happen to others.’

Still, according to CNBC, he said that while ‘[t]here might have been some glitches in vaccination in recent weeks and months’, the vaccines mean that ‘we have now an instrument which could clearly lead us out of this economic downturn.’