Independent Strategy

Grey suits, not gamblers

Today’s Governing Council meeting shows the ECB is steady as she goes. The reduction in the pace of purchases for the Pandemic Emergency Purchase Programme (PEPP) this quarter is not tapering, however one likes to pretend. Reducing the rate of buying is actually just extending the duration of the fixed-size programme, which makes exit an easier process. There is no incentive to alter policy prematurely, or even before outcomes are assured. We ought to get a proper debate on tapering in December, but not before. This is all neutral for the euro, bond yields are likely to edge higher reflecting improving fundamentals and real yields will remain depressed. The most positive view should be kept for Eurozone equities.

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