ECB Pumps Up Bond Buying After Promise to Fight Yield Gains

Posted on 03/23/2021


The European Central Bank (ECB) expanded the pace of emergency bond-buying to combat the economic threat from higher yields. Net purchases settled last week climbed by 21.1 billion euros, the most since the start of December 2020.

European government officials are fearful that Europe’s extended COVID virus lockdowns and a tepid vaccination rollout means it isn’t ready to deal with higher borrowing costs. The ECB is looking at lockdowns and contact restriction measures on whether or not the pandemic emergency purchase program will stop.

In a March 22, 2021 blog post by Christine Lagarde, President of the ECB, “One year ago, we launched our pandemic emergency purchase programme (PEPP). Since then, the PEPP has provided crucial support to euro area citizens in difficult times. It stabilised financial markets by preventing the market turbulence in the spring of last year from morphing into a full-blown financial meltdown with devastating consequences for the people of Europe. And it has ensured that financing conditions have remained favourable, helping households and families to sustain consumption, firms to remain in business and governments to undertake the necessary fiscal actions.

We launched the PEPP on 18 March 2020, with an initial envelope of €750 billion, as a targeted, temporary and proportionate measure in response to a public health emergency that was unprecedented in recent history.”

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