FRANKFURT (Reuters) - The European Central Bank bought more than two billion euros of Italian and French bonds than it was supposed to in June, moving further away from a rule aimed at ensuring that its stimulus is evenly spread across the euro zone.
Growing deviations from its “capital key” rule, which ties government bond purchases to each country’s size, suggest the ECB was having an increasingly hard time finding enough paper to buy while respecting the other constraints of its money-printing scheme.
A scarcity of eligible bonds to buy has been mentioned as one of the reasons for the ECB to start winding down the 2.3 trillion euros ($2.61 trillion) programme as inflation recovers.
“The ECB is ... still managing to buy more than the prescribed monthly amount of 60 billion euros, although the constraints are becoming more visible and will intensify,” Kim Liu, an analyst at ABN Amro, said.
The ECB and the euro zone’s central banks bought 10.8 billion euros of French government bonds and 9.3 billion euros worth of equivalent Italian paper, data showed.
In each case this is more than 1 billion euros in excess of those countries’ quota of the ECB’s capital.
By contrast, the ECB bought less than half the Portuguese bonds it should have at just 498 million euros.
This is because the ECB already owns Portuguese bonds bought during the crisis, meaning it risks breaking a self-imposed rule that bars it from owning more than a third of any country’s debt.
Suggestions by President Mario Draghi last week that the central bank may change its bond-buying policy rattled markets.
Sources have told Reuters the market move had spooked some policymakers, making the nervous about signalling a change in policy when they meet again on July 20.
($1 = 0.8811 euros)
Graphic by Divyang Shah at IFR in London Editing by Jeremy Gaunt