It’s not a question of opting for taper. The ECB has had no choice but to taper.As Sphia Salim, Ruairi Hourihane and Erjon Satko at BoAML outline on Wednesday, the ECB will need to lower purchases to bn per month from January 2018, while also changing many of the implementation details for Germany, if it’s to avoid a messy issuer constraint that could leave it short of assets to buy.Here’s the rub specifically:As the chart above chart, the Bundesbank has already begun to decelerate asset purchases — possibly in anticipation of future diminished stock.As the BoAML analysts explain:It would appear that, with QE likely to be extended, the Bundesbank may be taking the proactive step to reduce purchases back in line with Germany‘s true capital key (Chart 2). With issuer constraints likely to
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It’s not a question of opting for taper. The ECB has had no choice but to taper.