We think the ECB will tweak its monetary policy statement next week by pledging to maintain favourable financing conditions but not renewing its pledge to keep PEPP purchases at the recent “significantly higher” pace for the next three months. This would prepare the ground for a very gradual taper beginning in Q3 and for net PEPP purchases to come to an end next March. But with expected inflation likely to remain well below target next year, we think policymakers will increase monthly APP purchases when the PEPP ends.
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