Recently, in parallel with rapid recovery, China observed a rapid increase in foreign exchange inflows and a substantial rise in liquidity, which remains abundant despite of vigorous sterilization efforts. This leads to potential risks of heightening inflation expectation and asset speculation.
At the same time, the marginal benefit of further purchases is steadily declining, with market participants already bracing themselves for a certain degree of “normalisation". It is for the ECB Governing Council to decide when and how such a course of normalisation will take place. I cannot, and would not wish to, speculate on this matter.