The European Central Bank bought fewer German bonds than it should have for a sixth straight month in September, a sign that it may be saving ammunition for an extension of its stimulus programme well into next year. The ECB is expected to announce this month it will extend its 2.3 trillion euros bond-buying scheme into a fourth year in a bid to support inflation in the euro zone. But its holdings of German debt are already nearing a self-imposed cap set at a third of any country's debt.
Data on Tuesday showed the ECB has been quietly deviating from its national quotas since April to buy fewer public-sector bonds from Germany and more from Italy and France. This will create more room to keep buying bonds next year but is also likely to stiffen German criticism of the programme, which is blamed there for bankrolling indebted governments and fuelling bubbles in bonds and real estate.
The average maturity of German bonds bought by the ECB and the Bundesbank rose to the highest since January, when the rules of the programme were changed to include bonds yielding even less than the ECB's negative deposit rate. Purchases of Portuguese, Finnish and Slovakian bonds were also below those countries' quotas, which depend on how much capital each country has paid into the ECB, while purchases of Belgian and Spanish debt were oversized.
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