2017.11.2400:55:00UTC+00ECB Concerned Markets Anticipate Additional QE Extensions

Some policymakers of the European Central Bank were concerned during the meeting last month that failure to issue an end-date on their bond-buying program may propagate unwarranted speculation in the markets that the quantitative easing could be extended again in 2018.

A readout of the October 25-26 Governing Council session showed officials are worried that the open-ended nature of the QE program might prompt expectations of further extensions as the intended end date of the program nears.

The ECB ruled to prolong quantitative at the reduced monthly rate of 30 billion euros at least until September 2018, promising to extend more if the inflation outlook failed to develop towards expectations. While the decision was mostly supported by members of the governing body according to the accounts of the meeting, a number of alternative strategies were proposed and discussed at the meeting.

Some members expressed for a several overall envelope of the targeted APP buying, as well as a change in the monthly pace of buying for a given intended envelope. Meanwhile, others wanted a longer purchase period to give more prolonged monetary support and voiced worries regarding the possibility of unintended repercussions of issuing a firm date to stop the program.