Quantitative tightening and the repayment of TLTROs mean that the ECB’s assets are likely to decline by around one quarter by the end of 2024. We expect the repayment of TLTROs to have a negligible macroeconomic impact. QT should also proceed smoothly, particularly as the Bank would be likely to reverse course if there were a crisis in the bond markets, unless it were caused by reckless fiscal policy or a government toying with an exit from the euro-zone.
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