ECB: Tapering in perspective – ING

In view of analysts at ING, the amount of assets that are eligible for the ECB to purchase are running out.

Key Quotes

“Sovereign debt holdings (% of targeted market) are getting close to the 33% limit.”

“Out of the larger European economies, Germany is the most problematic with about 27% of bonds held by the ECB.”

“The scarcity of German bonds will be a key factor in determining how much longer the ECB can keep QE going - unless it changes the rules under which is operates.”

“A reduction to €30bn a month means the ECB would be able to buy German bonds until August 2018, but that doesn’t leave much leeway for any further QE extensions.”

“But if the Governing Council makes some technical tweaks –like extending the eligible maturities, or increasing the issuer limit – the ECB could continue QE at €30bn per month until January or June 2019.”