The ECB is likely to continue buying bonds until 2022; PEPP can recover

FRANKFURT (Reuters) – The European Central Bank is likely to continue buying bonds to boost the bloc’s economy until 2022 and may also resume pandemic emergency bond purchases after the end of March, ECB Vice President Luis de Guindos told French newspaper Les Echos on Tuesday.

The comments indicate that there will be no rate hike next year, as the ECB’s guidelines stipulate that any increase in the interest rate will come shortly after the end of the quantitative easing.

But de Guindos was more cautious in 2023, unlike his Spanish politician Pablo Hernandez de Cos, who on Monday announced next year that he would not raise the rate hike “in a timely manner,” arguably.

“I’m sure these clean purchases will continue over the next year. Beyond that, I don’t know,” de Guindos said.

De Guindos also took a relatively calm stance on the Omicron variant of COVID-19, arguing that the bloc’s economy has adapted well to living under the pandemic and that vaccines are progressing.

As a result, purchases of bonds under the Pandemic Emergency Purchase Program (PEPP) of € 1.85 trillion will end next March, but the ECB will keep the scheme closed if necessary again.

“The president of the ECB has announced that net purchases (as part of the emergency program) will end in March. But he could resume it if necessary,” de Guindos added.