FT: ECB buys government bonds of weak eurozone economies
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The European Central Bank (ECB) is buying millions of euros worth of government bonds from the eurozone’s most vulnerable countries, reports Financial Times (FT). The ECB plans to support them during a period of economic instability and rising interest rates.
According to the FT, in June and July, the regulator invested €17 billion in the government bond market in Spain, Italy and Greece, while the volume of government bonds in Germany, France and the Netherlands decreased by €18 billion due to the expiration of their maturities.
“The ECB appears to be very active, reinvesting virtually all of its revenues from key countries in the periphery,” said Frédéric Ducrozet, head of macroeconomic analysis at Pictet Wealth Management. The adopted measure of the ECB helps to contain the gap between the economies of the eurozone countries.
As Kommersant previously reported, rising inflation in the euro area is forcing the regulator to tighten monetary policy. It is expected that inflation will peak in the third quarter of this year. 21 July ECB raised a rate of 50 basis points (up to 0.5%) based on inflationary risks. The normalization of interest rates, as reported by the bank, will allow the regulator to buy bonds in the presence of signs of unjustified financial fragmentation.
Read more about the forecasts for the eurozone economy – in the material “Kommersant” “2023 is not the same as before”
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