ECB Preview: Six-month PSPP extension and then what? - Nomura

The December ECB Governing Council meeting has been highly anticipated for the clarity it should offer on the future of the Asset Purchase Programme (APP) that is currently scheduled to end in March 2017, suggests Research Team at Nomura.

Key Quotes

“Our baseline remains a six-month extension to the programme duration that would take it to at least September 2017. We also expect the ECB to maintain the current pace of purchases of EUR 80bn per month, although with balance of risks skewed towards an extension but at a slower pace. In terms of amendments to the technical parameters of the programme, we expect the ECB to announce an increase in the ISIN and issuer limits for non-CAC bonds from the current 33% to 45%. The ECB might also alleviate the deposit rate constraint but we see this as less strategic for the smooth implementation of the programme at the current level of rates. Finally, we do not expect any changes in either of the policy rates at the December meeting.”