FRANKFURT: The European Central Bank (ECB) feels it is too early to start discussing a new round of monetary policy easing, a top official said on Monday, but insisted that the ECB was still ready to act if needed.
“If anything were needed, we would need to be ready,” ECB executive board member
Benoit Coeure told CNBC Television in an interview.
In March, the ECB launched a highly controversial program of bond purchases, known as quantitative easing or QE, to push eurozone inflation back up to levels that are more conducive to healthy economic growth.
Initially, the program—under which the ECB plans to buy as much as 1.1 trillion euros ($1.3 trillion) of bonds at a rate of 60 billion euros per month until September 2016—appeared to work. But a renewed decline in oil prices and the economic slowdown in China has pushed area-wide inflation expectations back down, reigniting fears of a potentially dangerous downward spiral of falling prices.
And that has led to speculation that the ECB might need to extend its QE program or launch a new one.
But Coeure said it was “too early to pass that kind of judgement.”
“Of course, we have only executed, delivered, one third of the program,” he argued.
The beneficial effects of a range of other policy measures—unprecedented amounts of liquidity and historically low interest rates—were also gradually making themselves felt, Coeure said.
“It is all feeding into the economy at a slow pace, so it is certainly too early to measure the full extent of what we have done over the last couple of years,” he said.
So, it was “premature to discuss” a new QE program.
“But it is certainly our duty to be prepared to cope with all kinds of contingencies,” he said.
The ECB’s decision-making governing council is scheduled to hold its next regular policy meeting next week in Malta.