Skip to main content

Limits to ECB’s “unlimited” tool will soon be tested

The ECB new spread-fighting tool received this week a lukewarm welcome from investors, despite its potential for unlimited asset purchases. That reflects both the ambiguity surrounding the criteria for the ECB to activate the Transmission Protection Instrument and the numerous eligibility conditions. In any case, it seems evident that the ECB will not deploy the TPI to alleviate investors’ biggest concern at the moment: the implications of fresh elections in Italy for the country’s economic management and debt sustainability. Next week, GDP data are likely to show a small expansion in the euro-zone economy in Q2, but survey measures and inflation data for July are set to reinforce the message that the euro-zone is mired in stagflation.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access