ECB slows down PEPP purchases

The European Central Bank slowed down the rate of asset purchases under the Pandemic Emergency Purchase Programme (PEPP) in the week ending on July 24.

It bought €19.3 billion ($22.6 billion) in assets under the PEPP, according to data released by the ECB today (July 28). That is the lowest weekly rate of purchases since the ECB launched the programme in April.

So far the ECB has acquired €422.6 billion in assets, mainly sovereign bonds, but also commercial paper, corporate bonds and covered bonds.

The ECB’s governing council agreed to create the programme in March, amid alarm over the economic impact of the pandemic. The ECB first designed the PEPP to buy €750 billion until the end of 2020. It increased the programme’s maximum spend by €600 billion in June, to €1.35 trillion to be bought by June 2021.

Some senior officials, including Netherlands Bank governor Klaas Knot, have said the ECB may not need to make full use of the PEPP over the next year. But ECB president Christine Lagarde has disagreed.

In the press conference on July 16, Lagarde said the ECB can slow down the rate of purchases “because financial markets have been more stable, because the fragmentation risk has been significantly reduced”.

Nonetheless, she said that “unless there were significant upside surprises, our baseline remains that we will use the entire envelope”.