Europe’s Low Real Rates Fuel Talk of Faster ECB Bond Runoff
- Analysts see ECB acting faster to shrink its bond portfolio
- Comments by policymakers have amped up the QT debate
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Speculation is mounting the European Central Bank will shrink its bond portfolio at a quicker pace to ensure it keeps financing conditions tight as the end of its rate-hiking cycle approaches.
Traders are betting the ECB is almost done lifting borrowing costs as evidence of the economic damage inflicted by tighter monetary policy builds up. But with longer-term real rates failing to rise in response this year, analysts at ING Group NV, Mizuho International Plc and AFS Group suggest the central bank may seek to shrink its bond holdings at a faster lick.