We should thus maintain the policy optionality to adjust our purchase pace in either direction, if needed.7 A second challenge is that, when we transition from the PEPP to the APP, we will likely lose some of the flexibility that was embedded within PEPP. This flexibility has served us well in countering risks to the monetary policy transmission mechanism caused by the pandemic.
PEPP has therefore been designed in such a way that purchases can be conducted in a flexible way over time, across asset classes and among Euro Area countries. When we transition out of PEPP, we will need to assess whether maintaining this type of flexibility is proportional and, if so, how it can best be achieved.