Bastien Drut, fixed-income and forex strategist at Amundi commented on the European Central Bank’s interest rate decision and Mario Draghi’s press conference.
Drut said the ECB awaits new economic projections before its makes any adjustments to its purchase programmes, further highlighting that on 8 September, the institution is expected to announce their extension until September 2017.
Amundi’s strategist however assessed the public sector purchase programme (PSPP) of the ECB in its current form could not be applied for long.
“Currently, the Bundesbank can only buy securities with a maturity between 7 and 31 years, which means that the stock of German PSPP eligible bonds is shrinking and shrinking fast.
“The announcement of a deviation from the capital rule for sovereign bonds purchases is likely, what would mean less purchases of German securities and more purchases of Spanish and Italian securities,” Drut explained.