‘The Lady Isn't Tapering.’ But Ask Again in December
There’s been a lot of hand-wringing over Lagarde’s statement and what it means for the future of the ECB’s bond-buying program. But a bigger test is looming.
To taper or recalibrate? That is the question.
Photographer: Alex Kraus/BloombergThe European Central Bank has made a very small down payment on a prolonged economic recovery, one durable enough to withstand Covid-19's troubling variants and any other pandemic developments. But the big decision-making comes in December, when the central bank undertakes a comprehensive review of its bond-buying program, with a few more months of delta under its belt and a better sense of direction about the Federal Reserve’s withdrawal of stimulus. There will be less room to fudge the messaging.
On Thursday, the ECB said it would slow the pace of bond-buying in the last quarter of the year. The announcement prompted a lot of hand-wringing over what a “moderately lower pace” of asset purchases really means, and whether it constitutes a taper — that is, a discernible reduction in stimulus. President Christine Lagarde told reporters, “The lady isn't tapering.” Some investors were more skeptical, arguing that it isn’t the official spin but the end result that matters.