AFP, Frankfurt :
European Central Bank policymakers disagreed on leaving the bank’s mass bond-buying programme open-ended, with some arguing in favour of “a clear end date”, minutes from a meeting last month revealed Thursday.
The ECB last month announced it would halve its bond purchases to 30 billion euros ($36 billion) a month from January as the eurozone recovery gathers pace, allowing the Frankfurt institution to begin winding down its crisis-era stimulus measures.
Policymakers said the purchases would continue until at least September 2018, and beyond if necessary, reassuring markets that the ECB stood ready to ramp up efforts again if needed.
But the minutes from the October 26 governing council meeting showed that “a few members” were “in favour of announcing a clear end date” for the scheme.
“A view was put forward that there was no longer a case for an open-ended extension, unless deflation risks were to re-emerge,” the minutes read.
“Some concerns were also expressed that the open-ended nature of the (bond purchases) might generate expectations of further extensions as the intended end date of the programme approached,” they added.
In the end, however, “a large majority of members” backed an open-ended extension of the scheme to signal that the bank would not suddenly abandon its easy money policy at a time when sluggish inflation remained cause for concern.
“It was cautioned that any doubt about the governing council’s price stability commitment could entrench inflation expectations at low levels,” the minutes showed.
The ECB has spent more than two trillion euros on government and corporate bond purchases since March 2015 in a scheme known as quantitative easing (QE).
The programme, along with low interest rates and cheap loans for banks, is aimed at pumping cash into the financial system, encouraging spending and investment in a bid to drive up growth and inflation.
While the recovery in the 19-nation single currency area has since picked up speed, inflation remains stubbornly below the ECB’s target of just under 2.0 percent, suggesting more stimulus may still be needed.
ING Diba bank economist Carsten Brzeski said the minutes revealed the rift between policymakers on how to end QE.
“Further down the road, i.e. beyond September 2018, new disagreements could emerge,” he predicted.
“In our view, the ECB will do another ‘lower-for-longer’ after September 2018. But this discussion is not for now.”
