ECB signals faster money-printing to keep lid on yields

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The European Central Bank said on Thursday it would accelerate money-printing to keep a lid on euro zone borrowing costs, signalling to sceptical markets that it is determined to lay the foundation for a solid economic recovery.

Concerned that a rise in bond yields could derail a recovery across the 19 countries that share the euro, the ECB said it would use its 1.85 trillion Pandemic Emergency Purchase Programme (PEPP) more generously over the coming months to stop any unwarranted rise in debt financing costs.

Sources told Reuters that policymakers had set a monthly target but agreed not to disclose it. Purchases would not be as high as the 100 billion euros a month the ECB was buying in the spring of 2020, they said, but would still be well above the 60 billion euros of bonds it scooped up in February.

“The Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year,” the ECB said in a statement after its regular policy meeting.

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