ECB discusses faster reduction of bond portfolio

European Central Bank (ECB) officials are reportedly discussing options to accelerate the shrinkage of the institution’s 5 trillion-euro ($5.5 trillion) bond portfolio. With the ECB in the midst of a historic rate hike, policymakers could already accelerate the contraction of its balance sheet, Bloomberg reported, citing sources familiar with the matter. The sources, who asked not to be identified, said some hawkish ECB officials were open to considering selling securities from the ECB’s portfolio to complement steps taken so far, while others could opt for a gradual tapering of reinvestments in bonds purchased during the pandemic. Any move would accelerate the tapering of past stimulus that began last year as inflation rose. The sources also said there had been no formal discussion in the Governing Council on the issue and no decision had been taken soon. The ECB, which has halted net asset purchases, began shrinking its bond portfolio in March by allowing an average of 15 billion euros a month to be rolled over rather than reinvested as before. That pace is expected to roughly double when reinvestment is halted entirely next month.