“We believe Thursday’s ECB meeting will provide substantial updates on growth projections, while changes to inflation forecasts are likely to be mitigated. Tapering will not be discussed at this meeting: if the commitment to buy at a “significantly higher” pace were attenuated, it would be an aggressive change, which we do not expect yet “, comments Alberto Gallo, manager of the Algebris Global Credit fund. However, third-quarter purchases could be reduced amid weaker seasonal issuance – without more aggressive, ‘hawkish’ implications.
“Considering that Europe is reaching the level of vaccination doses distributed in the United States and the economy continues to stabilize, we believe that the ECB will discuss the reduction of Pepp in the coming months and eventually could do it in parallel with the Fed – adds Gallo. -. However, the forward guidance will highlight that monetary policy will remain accommodative for a long time, as the ECB cannot afford peripheral government yields to grow substantially in a still high sovereign debt situation ”.