Emanuel Skeppås

Nov 14, 2024 | ecb.europa.eu | Yıldız Akkaya |John Hutchinson |Kasper Jørgensen |Emanuel Skeppås

The Eurosystem has started to reduce its bond holdings. This ECB Blog post investigates how strongly the shrinking balance sheet affects long-term interest rates. Estimates based on the Survey of Monetary Analysts suggest: an expected €1 trillion reduction in bond holdings may raise long-term risk-free interest rates by about 35 bps. The ECB reacted forcefully in response to the recent inflation surge. The Governing Council used its primary tool of increasing key interest rates.