ECB Spent 63 Billion Euros on Bonds Last Month With Frontloading

  • Central bank stepped up QE program before holiday period
  • ECB said last week that it'll boost QE by 360 billion euros

The European Central Bank kept up its accelerated pace of bond buying before liquidity dries up over the region’s holiday period.

Holdings of public and private-sector debt under quantitative easing climbed by 62.6 billion euros ($67.7 billion) in November, data on the ECB’s website showed on Monday. The central bank intends to buy an average of 60 billion euros a month of bonds as it tries to revive inflation in the 19-nation euro area.

ECB President Mario Draghi announced a “recalibration” of the QE program on Dec. 3, extending its duration by six months to at least March 2017 and saying the proceeds from maturing debt would be reinvested. That adjustment disappointed investors and economists, who had predicted an increase in the level of monthly purchases, and sent the euro and bond yields surging.

Draghi addressed the response by investors in a speech in New York on Dec. 4, saying the combination of measures “was not a package meant to address market expectations.” It was instead “meant to address the reaching of our objectives,” he said in a speech at the Cipriani Wall Street restaurant.

The recalibration will add some 680 billion euros in liquidity to the system by 2019, he said. Some 360 billion euros will be created through the extension of the program, with 320 billion euros reinvested over the period. The program has a total size of at least 1.5 trillion euros.

Holdings of sovereign and agency debt climbed by 55.1 billion euros last month, the ECB data showed. Holdings of covered bonds rose by 6.9 billion euros, and of ABS by 624 million euros.

The pace of buying in November compares with 63.7 billion euros in October. The central bank intends to step up purchases this month before suspending them between Dec. 22 and Jan. 1 in anticipation of lower liquidity. It will resume buying on Jan. 4.

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