Nomura Research discusses its expectations for the ECB policy trajectory and expects the central bank to delay PEPP tapering until Q4.
"Our view of our 2022 inflation forecast and rising yields since the March meeting, we think the ECB will decide not to taper in Q3 and purchase at the current rate until the ECB’s September meeting. Thereafter, we see purchases reduced to €15bn per week. Bearing in mind lower purchases in August, December and January due to market liquidity, the ECB may exhaust its PEPP envelope by April 2022," Nomura notes.
"We expect the ECB to use the full PEPP envelope, but not expand the programme further. We see it having a rethink about the current policy mix towards end-2021," Nomura adds.