Economists eye end of ECB bond purchases

ECONOMISTS have suggested that the European Central Bank has brought an end to its bond-buying programme after a statistical release yesterday revealed that it did not intervene last week.

However, others say that the bank is highly likely to have waded into a sale of Portuguese debt on Friday, but that the purchases have not yet cleared and will appear in next Monday’s figures.

Lisbon sold €1.64bn (£1.44bn) of one-year debt in an auction announced at the last minute on Thursday. It has plans to sell another €7bn in the next quarter to refinance €4.77bn of debt.

The week before last, the ECB broke its three-week spell of non-intervention by buying €432m in a move that many suspected was designed to keep Portuguese yields down after its government fell.

ING’s Peter Vanden Houte said: “This government bond buying programme is inconsistent with the ECB’s wish to embark on a tightening cycle. With rising interest rates the ECB will face increasing losses on the bonds it bought on the secondary market.”