Strong investor inflows into bond markets this year mean traders and bankers are confident the European Central Bank will have a smooth start to unwinding its huge bond holdings, but the long-term impact of its ‘quantitative tightening’ is a big unknown
QE was a new experiment that drove cash into risk assets globally. Therefore, QT and how it impacts markets is also a big unknown.delay its plansThe ECB is launching QT by not fully reinvesting proceeds from maturing debt bought under its Asset Purchase Programme launched in 2015.
If APP reinvestments stop before the end of 2024, ECB market presence would rely on reinvestments under the more flexible Pandemic Emergency Purchase Programme . Some sources with knowledge of ECB discussions say that policymakers want QT to merely run in the background, rather than follow an aggressive schedule or timeline.
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