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ECB to review its corporate bond purchase plan

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ECB to review its corporate bond purchase plan

The European Central Bank is reassessing its corporate bond purchase plan, Bloomberg said, citing anonymous euro area officials familiar with the details.

The report said that the Market Operations Committee is reviewing the strategy's effectiveness and its influence on the credit supply to the euro area economy, after having spent 126 billion so far.

The review comes with ECB about to decide how it will implement a slowdown in quantitative easing scheduled for January.

The officials reportedly claim that policymakers discussed whether large firms and their shareholders stand to benefit more from the strategy. In an emailed statement, the ECB said it is "constantly monitoring the impact of its asset-purchase programs."

As the program is expected to exceed 2.5 trillion by September 2018, and a number of countries continue to struggle with sovereign debt issues, the share of corporate bonds could increase, according to the report.

President Mario Draghi was quoted as saying in October that the purchase of private sector securities will remain "sizeable."

The ECB decided to reduce its monthly purchases by half in October following its purchase of 2.2 trillion worth of bonds since March 2015. It extended the plan by nine months as inflation failed to rise significantly.

Five unnamed sources who spoke to Reuters said they were pleased that investors perceived the action as a way of prolonging cheap finance instead of a move toward tightening.

The sources are convinced that the year's final meeting in December will be uneventful despite ECB President Mario Draghi's statement that a few decisions will be announced.

The sources further added that ECB's bond purchasing plan will be phased out by the end of 2018 should the economy and inflation behave as expected.

One of the sources reportedly said they do not expect a significant policy decision until the end of September 2018, although there has not been a formal discussion about the next steps ECB will take.

The ECB refused to comment on the matter, according to Reuters.