CBBP3’s share of the monthly net APP increase fell from 18% in January to 14% in February, but analysts said the overall handling of the ECB’s programmes suggested no change in its strategy – even if they differ over any potential reaction to the Covid-19 outbreak.

Settled and outstanding purchases under the asset purchase programme (APP) rose €23.462bn from €2.599tr to €2.623tr across February, according to monthly data released by the European Central Bank (ECB) on Monday.

Holdings under the third covered bond purchase programme (CBPP3) increased a net €3.334bn across the month, constituting 14.2% of the overall net increase, versus 18.1% in January. However, the corporate sector purchase programme (CSPP) took up the slack and the private sector programmes constituted 39.7% of the net APP increase.

“This shows that similar to January, only 60.3% of net asset purchases were done in PSPP vs. close to 80% in the 2016-2018 period,” said SG analysts. “February net APP figures show that the ECB continues to focus more on private-sector debt, possibly in order to delay hitting issuer limits on sovereign and agency debt.”

They also noted that CBPP3 gross purchases in February of €4.5bn were down from €7.3bn in January given €1.18bn of redemptions last month, but “still sizeable” compared with €10.75bn of eligible benchmark issuance settling in the month.

“This may help explain why covered bond spreads are holding pretty steady despite tight pricing and increasingly negative Covid-19 headlines,” said the SG analysts.

Crédit Agricole analysts nevertheless said there is nothing in APP figures to suggest the ECB upsized purchases during last week’s turmoil in any attempt to “hold back the tide” and calm down markets. They noted the monthly €20bn APP target had been met after the first three weeks of February and that the Eurosystem “merely added” €2.6bn in net settlements in the final week of the month.

The next meeting of the ECB’s governing council is due on Thursday of next week – in spite of the central bank announcing coronavirus-related operational precautions today (Wednesday) – and analysts differ as to whether or not it will follow the Federal Reserve’s example of yesterday and cut rates.

Crédit Agricole analysts say there are no clear reasons why the ECB should act quickly, and that their view is somewhat reinforced by the market’s reaction to the Fed cut.

“On the contrary, an unprepared quick decision could be interpreted as a sign of panic,” they said. “We also insist that the usual package (bigger QE, lower rates) is not necessarily the right tool in this situation and that the ECB should instead tread lightly where its intervention is warranted and useful.”

But ABN Amro analysts now expect the central bank to act in March, compared with a most recent forecast of June action.

“It is a very close call, but we think the March meeting is somewhat more likely than at April’s meeting,” they said. “We continue to expect the ECB to cut its deposit rate by 10bp, step up net asset purchases to €40bn and further loosen conditions on the TLTRO programme.”