Daily Commentary BY THE CURVE TEAM –

ECB Step up Bond Buying

13th of April, 2021

The ECB bond buying is a reminder of economic circumstances beyond Australia.

The Pandemic Emergency Purchase Programme (PEPP) has been in operation since the start of covid. It is the quantitative easing programme specifically to assist the economy during covid.

So far 960 billion euros of bonds have been purchased, which dwarfs Australia’s $100 billion of purchases so far. Last week the ECB purchased 17.1 billion Euros of bonds, more than their usual 10.6 billion.

This increase may prove temporary. The RBA temporarily increased the pace of their purchases in the face of market turmoil in February.

It is a reminder though of the enormous programmes being run by overseas central banks. As the Australian Dollar has come off recent peaks, there has been less pressure on the RBA to reign it in.

Nonetheless, the policies of other central banks will continue to bind the RBA. While big QE programmes are occurring overseas it is harder for the RBA to justify ending their own.

Today business confidence and conditions for March are released. Also, our monthly insights for April will be sent out.

Josh Stewart

Associate - Money Markets