MNI BRIEF ECB Bond Portfolio Tilt To Shorter Assets -Schnabel

The European Central Bank’s new structural bond portfolio should tilt towards shorter-dated assets to avoid interferences with monetary policy transmission, ECB executive board member Isabel Schnabel said on Thursday.

In a speech in Frankfurt, Schnabel said that the SBP would be guided by the principles of policy stance neutrality, preservation of policy space, and ensuring the financial soundness of the central bank.

The portfolio will be introduced only after structural longer-term refinancing operations have been deployed, and will be sized according to the gap between banks’ structural liquidity needs and the rundown of legacy bond holdings, she said, adding that as the portfolio launches, its composition, maturity and size will remain distinct from past QE programmes, signalling a structural shift in the eurosystem’s balance-sheet strategy.