ECB to halve QE purchases in 2018

The ECB is considering cutting its monthly bond buying from €60bn to €30bn at its next board meeting on 26 October, according to a Bloomberg report.

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Bloomberg is rather vague about its sources, naming them as ‘officials’ only, but such an outcome would be a rather logical compromise.

Central bank officials and politicians from northern Europe have long opposed QE and want the programme to end as soon as possible, while Europe’s southern half prefers it to continue.

Investors are split along the same geographical lines, recent polls from Portfolio Adviser’s sister-title Expert Investor suggest. When it asked an audience of fund selectors at the Expert Investor Stockholm forum this week, a large majority said they wanted QE in Europe to end in 2018 (the Swedish central bank is running an asset purchasing programme comparable to that of the ECB).

Last week in Milan however, a group of Italian fund buyers said they would prefer QE to continue next year. Bond markets do currently not price in an abrupt end to the ECB bond buying. Over the past month, peripheral bond spreads have narrowed while German bund yields have risen modestly to 0.43%.

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