mercoledì 12 giugno 2019

The effects of APP reinvestments on euro area bond markets

In December 2018 the Governing Council decided to halt net purchases under its asset purchase programme (APP) and to continue reinvesting, in full, the principal payments from maturing securities for an extended period of time past the date when we start raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

In my short remarks this evening I will take stock of euro area bond market developments since the start of the year without elaborating on the future course of monetary policy, which the Governing Council discussed at its meeting last week in Vilnius.

I will show that the APP has continued to provide substantial monetary accommodation also after the transition from net purchases to reinvestments. The stock effect of our asset purchases, alongside clear forward guidance by the Governing Council on its intentions regarding reinvestments and policy rates, has helped to preserve very accommodative financial conditions.

And our decision to distribute redemptions under the public sector purchase programme (PSPP) over the year, and to maintain our presence in primary markets under some of the private asset purchase programmes, has supported the transition with minimal impact on market functioning.(...)

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