ECB’s Villeroy: PEPP Purchases to Continue Until at Least March 2022

11 May 2021

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau said Tuesday that the ECB’s asset purchases under the pandemic emergency purchase programme (PEPP) would continue until at least next March.

Speaking to French television channel France Info, Villeroy, who heads Banque de France, said with regard to talk of a withdrawal of support by the ECB that ‘all that a is mini-storm in a glass of water’.

‘There are two certainties about our monetary policy: The first is that we are going to continue our purchases under our exceptional Covid programme at least until March 2022, and that every hypothesis about a reduction in the volume of our purchases … is purely speculative’, he said.

It is as ECB President Christine Lagarde already affirmed, he said: ‘We did not even speak of this during our last Governing Council meeting. And our volume of purchases each month is going to remain freely determined until the end by our will – we’ve said it – to guarantee favourable financing conditions for all economic agents.’

The other certainty, he continued, is that ‘if, hypothetically – I underscore the “if” – these purchases under the PEPP had to stop after March 2022, our monetary policy would remain very accommodative well beyond that date and as long as necessary’.

With respect to the weakness last month of the Banque de France’s monthly business survey, Villeroy said that April had effectively been a third month of confinement, but that the effect of containment measures had been ‘much less negative’ than previous rounds. ‘We have learned to work while protecting ourselves’, he said.

In any event, he said, the survey result ‘remains compatible for the year overall with a very strong rebound of growth … a growth of more than 5% for the entirety of the year 2021.’

French companies are optimistic about their prospects, with supply chain difficulties likely to be temporary and in fact a reflection of the recovery, he said. The Banque de France would however continue to monitor this, he said.

Pre-pandemic levels of output would be regained ‘in about a year’, he said.