Investors will have to step in and buy about €300bn more eurozone government debt next year to prevent market turmoil as the European Central Bank starts to cut its vast bond holdings, analysts have warned.
The ECB is due to outline plans to shrink its €5tn bond portfolio on Thursday, alongside an increase in interest rates of at least 0.5 percentage points to 2 per cent, as it steps up its efforts to tame soaring inflation by tightening credit conditions.
The central bank’s plan to cut its support for sovereign bond markets comes as eurozone governments are set to issue more debt next year to cover the cost of shielding households and businesses from the impact of high energy prices this year.
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