The ECB bought €600m’s (£507m) worth of gilts in the week to last Friday, marking a sharp downward shift from its purchases of €2.7bn, €2bn and €1.3bn in the previous three weeks respectively.
Last week also saw a disappointing auction of short-dated Spanish debt, with Spain selling less than expected and paying more for its money.
The slowdown in special bond purchases in part reflects a market wind-down before Christmas, but could also signal a concession to its board’s more hawkish German membership.
However, the lighter intervention is likely to be temporary. ING Bank’s Martin van Vliet said: “With the Eurozone debt crisis far from over, the ECB will probably be forced to ramp up its bond purchases again early next year.”
Goldman Sachs has estimated that, between them, Spain, Belgium, Italy and Portugal will need to refinance €707bn’s worth of debt next year.
With yields skyrocketing, it is likely that the ECB will be pressured to intervene in secondary markets to temper borrowing costs.