European Central Bank can still end bond buys this year
FRANKFURT/BRATISLAVA, May 23, (RTRS): The European Central Bank (ECB) can still end its bond buying program later this year, two policymakers said on Wednesday, even as fresh data cast further doubt on the health of the eurozone economy.
With asset buys set to expire at the end of September, policymakers are struggling to understand the source of the unexpected economic slowdown and debate whether the ECB should change course as growth is now likely to undershoot its projections.
But ECB board member Benoit Coeure and Slovak central bank chief Jozef Makuch both argued that the case for ending the 2.55 trillion euro scheme, credited with reviving growth, remained solid.
“At the end of last year, I said that I didn’t expect that our asset-purchase programme would need to be extended again. I see no reason to change my view,” Coeure told the German newspaper Die Zeit.
“We expect the economic expansion to continue, and we are increasingly confident that inflation will rise towards our aim of below, but close to, 2 percent,” he said.
Eurozone economic growth slowed more sharply than expected this month, a key business survey showed which, along with weaker inflation, has intensified concerns there will be no return to the bloc’s recent boom times.
But policymakers have argued that exceptional growth rates at the start of the year were never going to be sustained and even if the slowdown came earlier than expected, there is no drama.
A surge in oil prices along with a the euro’s weakness against the dollar could also add to inflation, potentially helping the ECB reach its inflation goal after years of misses.