Micron makes ECB suspicious of bond buying

A growing number of European Central Bank (ECB) governors are evaluating delaying the decision on their bond-buying program due to the uncertainty created by Ómicron, the novel coronavirus alternative.

The European Central Bank’s Board of Governors will meet on December 16 to decide whether to end its purchases of emergency bonds in March and how much debt to buy after that date in a bid to stabilize eurozone inflation at 2 per cent.

On the occasion of the symposium that brought together the monetary authorities on Wednesday, sources close to him said that there was an agreement to end the pandemic emergency purchase program in March, as President Christine Lagarde has repeatedly indicated.

The sources added that some conservatives would support leaving the decision on bond purchases until the next policy meeting on February 3, 2022, when more will be learned about the impact of the Omicron variable and inflation expectations.

They are likely to face resistance from the European Central Bank’s Executive Board, which signaled this month’s decision.

Monetary authorities have become less blunt on the outlook as the emergence of Micron has brought back travel restrictions and rattled financial markets.

Meanwhile, inflation hit a record high of 4.9%, according to data released on Tuesday, and is showing signs of penetrating more sectors of the economy, suggesting that prices will remain high for a longer period and may boost wage inflation.

The Fed sows doubts

Doubts intensified on Tuesday, when Federal Reserve Chairman Jerome Powell dropped his claim that the recent rise in US inflation is temporary and indicated the institution could withdraw its support faster than planned.

So far, the European Central Bank has stuck to saying that inflation has been driven by temporary factors such as higher energy prices, supply bottlenecks, and the underlying effects of the 2020 recession.