ECB’s Vasle: 4Q PEPP Asset Purchase Volumes to Be ‘Slightly Lower’ Than in 2Q and 3Q
10 September 2021
By David Barwick – FRANKFURT (Econostream) – Asset purchases made in the fourth quarter under the European Central Bank’s pandemic emergency purchase programme (PEPP) would be ‘slightly lower’ in volume than in the previous two quarters, ECB Governing Council member Boštjan Vasle said Friday.
In a statement issued in his name by the Bank of Slovenia, which he heads, Vasle said the ‘strong recovery’ of the euro area in the second quarter on the basis of vaccination progress ‘continued in the third quarter, despite the high risks associated with the future course of the epidemic.’
Inflation that would subside again next year and ‘extremely favourable’ financial conditions rounded out the backdrop against which the Governing Council on Thursday decided that PEPP purchases volumes in the fourth quarter would be ‘slightly lower than the temporarily elevated levels of purchases in the second and third quarters’, he said.
Economic growth going forward would be fueled by domestic demand and in particular private consumption, he said. ‘At the same time, the outlook for foreign demand growth has been revised significantly upwards on the back of a slightly more optimistic outlook for the euro area's key trading partners’, he added.
Like ECB President Christine Lagarde on Thursday, Vasle voiced the possibility that despite the ECB’s subdued inflation outlook for next year and 2023, ‘more protracted supply chain disruptions could also translate into more pronounced wage appreciation and broader inflationary pressures.’