Some inside and outside the bank believe it's high time that the ECB reduces its monetary stimulus as global supply chain problems push prices higher for all sorts of goods.The President of the European Central Bank Christine Lagarde delivers remarks during a joint press conference in Lisbon, Portugal.FRANKFURT — Market participants are keenly watching thethis week as the Frankfurt institution meets to discuss its pandemic-era stimulus amid soaring inflation and solid economic growth.
"Whereas the ECB may moderate the pace of its emergency asset purchases modestly in [the fourth quarter], we do not expect the bank to announce when and how it will phase out its big 'Pandemic Emergency Purchase Programme' and whether and to what extent it will beef up its modest standard Asset Purchase Programme and make it more flexible," Holger Schmieding, a chief economist with Berenberg Bank, said in a research note.
Currently the ECB buys 80 billion euros worth of bonds every month under the program, which will likely be reduced to 70 billion euros at the completion of its Governing Council meeting on Thursday, Schmieding added. It's worth noting the difference in opinion within the ECB's Governing Council. While some like the Bundesbank's Jens Weidmann openly warn of high inflation, others like France's François Villeroy de Galhau stress an improvement in financing conditions.