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Schnabel's comments were likely to be seen as
setting the scene for a further reduction in the pace of bond
buying as the euro zone's economy recovers from a
pandemic-induced slump and inflation expectations rise.
The ECB cut the pace of its Pandemic Emergency Purchase
Programme (PEPP) earlier this month and is expected to end it in
March. It is also running a smaller, older Asset Purchase
Programme (APP), which it plans to end "shortly before" raising
interest rates.
"As the inflation outlook brightens, it becomes less important
how much a central bank buys or when a reduction in the pace of
net asset purchases starts, but rather when such purchases end,"
Schnabel told a Latvian conference.
"It is the end date which signals that the conditions for an
increase in policy rates are getting closer. The precise
sequencing and timing will, of course, require careful guidance
when the time has come."
The ECB is set to make a decision on PEPP and APP in December
and Schnabel said the path ahead was still uncertain. Investors
expect APP to be increased from April to make up for part of the
missing PEPP volumes.
"Given the remaining uncertainty regarding the pandemic and the
economic and inflation outlook, our asset purchases – both under
the PEPP and the APP – will remain crucial in the time to come,
paving the way out of the pandemic and towards reaching our
inflation target," Schnabel said.
ECB board members used a similar narrative in 2018
https://www.ecb.europa.eu/press/
key/date/2018
/html/ecb.sp180223.en.html as they prepared to stop APP for the
first time.
(Reporting By Francesco Canepa and Balazs Koranyi)
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