ECB to Consider German Bond Scarcity When Considering QE Extension

The growing scarcity of German government bonds makes any major extension of the European Central Bank’s asset buying scheme difficult and this will be a key consideration when policymakers decide whether to extend the buys, three sources told Reuters.

German sovereign debt available for purchase by the ECB will be exhausted, at the latest, by the middle of next year, so a meaningful extension would require a redesign of the programme, a contentious issue since growth and inflation are both slowly moving in the right direction, sources with direct knowledge of the discussion said.

The 2.3 trillion euro bond buying programme, designed to revive inflation, is set to run until the end this year but even if policymakers agree this fall to wind it down, an orderly reduction known as tapering would carry it well into next year.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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