Most European Central Bank policy makers judged that buying government debt was the only option big enough to fight the threat of deflation when they met last month, an official account of the debate shows.
On Tuesday, we previewed today’s high-stakes Riksbank meeting, concluding, “Sweden’s 0% interest rate may actually look attractive compared to the negative interest rates in the Eurozone and Denmark. Therefore, the central bank may choose to cut interest rates slightly to -0.1% or -0.2% to prevent any further appreciation in the krona."
The ECB has restricted purchases of assets to covered bonds, though sovereign bonds and asset-backed securities are now on its shopping list. ECB officials accelerated covered-bond buying last week, with the total settled rising by more than 3 billion euros ($3.74 billion)