ECB introduces the t-word - ING

Carsten Brzeski, Chief Economist at ING, notes that the ECB just surprised by announcing that they will extend their QE programme by at least nine months, though at a smaller pace.

Key Quotes

“Currently at EUR 80bn per month, the ECB will cut the monthly purchases down to EUR 60bn per month from April 2017 to at least December 2017. Even without calling this tapering, the ECB just announced tapering. It is the combination of extending and tapering that we thought would not yet happen as it could risk an unwarranted increase in bond yields. A compromise resulting from increased pressure from the ECB hawks to stop or at least reduce QE. Whether it was a wise decision or whether the ECB could end up in a taper tantrum like the Fed did in 2013 remains to be seen.”

“We will now have to wait until the press conference at 2.30pm CET to get more details of the ECB’s decision.”