The European Central Bank is more likely to resume buying up sovereign bonds than it is to make any more cheap long-term loans, according to a poll of economists.
Bloomberg reported Friday that it surveyed 22 economists and of that number, 17 said the ECB would restart its Securities Markets Program (ECBCSMP) if the European debt crisis escalates. Only one believed it likely to offer more long-term loans, while nine said it was possible that the ECB would extend shorter-term loans of a year or two.
“Market stresses will eventually force the ECB to restart the bond program, but it’s not imminent,” Ken Wattret, chief euro-area economist at BNP Paribas in London, was quoted saying. “Trying to get consensus on the council for it will be difficult.”
The governing council of the ECB has split over the issue, with German members protesting a resumption of the Longer Term Refinancing Operations (LTRO) and saying that they are straddling both monetary and fiscal policy. Although LTRO warded off disaster over Spanish and Italian bonds that could have destroyed the euro zone, in the long run they are seen as ineffective in combating the larger crisis as yields on those bonds have begun to rise once more.