ECB to end reinvestment guidance

According to sources familiar with the matter, the European Central Bank will end reinvestment, but the decision will not come in September. According to sources close to the European Central Bank, the bank will soon discuss ending reinvestment of principal from asset redemptions. However, sources said that the ECB is unlikely to make such a decision at the Governing Council meeting next month. Pointing out that the focus in normalizing monetary policy is on interest rate hikes, sources said that ending reinvestment has been pushed to the back burner. In decisions published after the Governing Council meetings, the ECB stated that it would end reinvestment of principal redemptions “long after” the first interest rate hike. However, Governing Council member Isabel Schnabel said in a recent speech that some policymakers may open the issue of reinvestment to discussion at the September 8 meeting.