ECB's Villeroy says any hypothesis for a reduction of purchases for part of Q3 or following quarters is purely speculative

• The ECB is at least as accommodative and will continue to be as patient as the Fed


• Has the tools to keep policy loose


• 2% inflation goal should be a target, not a ceiling


• Net purchase volumes will be freely determined until at least March


• Monetary policy can be patient as Eurozone inflation is below other jurisdictions


• Based on our experiences with PEPP, the ECB could move towards some additional flexibilities in terms of allocation and/or volumes


• If necessary, the current level of the deposit rate is not a floor


• Tiering multiplier could be adjusted


• Believes that TLTROs should be kept in place in some form for more time

Reaction details (14:49)

• There was no initial reaction, although, in the aftermath to the dovish remarks downplaying tapering and pushing back against the more hawkish members calls for a potential reduction in purchases from around Q3-onwards, Bund June'21 subsequently caught a bid rising above the 169.64 resistance mark; technicians eyeing 1.69-77 as the next level of resistance ahead of 169.95


• Alongside this, yields came under pressure with periphery yields, such as the BTP June'21 yield dropping to a session low of 0.957%; for reference, the BTP-Bund yield spread was largely unreactive and remains around the 110bp mark


• However, it is worth highlighting that the EUR was unreactive to this commentary and the subsequent EGB move

25 May 2021 - 14:10- Fixed IncomeImportant- Source: Newswires