On 26 October, the ECB will announce a reduction in the pace of its asset purchases beginning in 2018, with a very likely phase-out of the purchases by the end of the year. Initiated in March 2015, the ECB’s quantitative easing (QE) will have a lasting impact on the European bond markets. It is now possible to conduct an initial assessment of how the ECB’s QE transformed the European sovereign bond market by focusing on its different aspects (scale of the purchases relative to issuances, changes in the structure of asset holdings, and the impact on the yield curve).
Let us recall the four landmark dates of the ECB’s QE:
- 22 January 2015: an asset purchase programme is announced starting in March 2015 and ending in September 2016 at a monthly pace of €60bn per month. The essential component of the programme chiefly related to the purchase of Public Sector bonds (PSPP) but also included purchases of ABS (ABSPP) and Covered Bonds (CBPP3)
- 3 December 2015: the decision is taken to extend QE until March 2017 at a pace of €60bn per month.
- 10 March 2016: the decision is taken to increase the volume of monthly purchases to €80bn as of 1 April 2016. Announcement of the Corporate Sector Purchase Programme (CSPP) starting in June 2016.
- 8 December 2016: the decision is taken to extend QE until December 2017 at a reduced pace of €60bn per month.