Investors should not read too much into lower bond purchase volumes from the European Central Bank in recent weeks as purchases could still increase later on, ECB board member Isabel Schnabel was quoted on Tuesday day as saying.
“There is typically less activity in both the primary and secondary markets during summertime. That’s one reason why the monthly volume of purchases may drop,” Schnabel told Spanish newspaper Expansión in an interview.
Schnabel added that the ECB was likely to use its entire bond purchase quota, seemingly backtracking on earlier comments that an emergency bond purchase scheme could be ended before it was fully utilized.
Although Schnabel and board member Yves Mersch both raised the prospect of an early end, ECB President Lagarde last week said this was unlikely, a comment Schnabel appeared to echo this time.
“As long as we remain in the baseline scenario of our projections, it’s likely that the (bond purchase) envelope will be used in full,” she said.
The ECB left policy unchanged last week, capping months of extraordinary easing as the 19-country euro zone’s economy started to slowly rebound as pandemic-related restrictions were gradually lifted.
Although the ECB has already agreed to buy 1.8 trillion euros ($2.06 trillion) worth of debt through next June and gave banks over 1.3 trillion euros worth of loans at deeply negative rates, economist still expect the bank to provide further stimulus as the recovery could prove protracted.
But Schnabel said the ECB would not let markets dictate policy and further stimulus could come only if real economic indicators indicated a need.