‘END ASSET PURCHASES IN SEPT’

Economists say ECB ‘should’ shut QE programme but split on whether it would, poll shows

THE European Central Bank (ECB) should shut the door on its monthly asset purchases next September, according to a majority of economists in a Reuters poll, but they were split on whether it would.

Most believe it will stop by the end of next year with a small number saying mid-2019.

A shutdown would be in step with other major central banks turning up the heat on monetary policy despite inflation well below their targets and generally ex- pected to stay that way in the year ahead.

The latest poll of more than 65 economists taken on November 24-29 also underscores confidence in the eurozone economy, with the current upswing predicted to continue next year, even as a significant pickup in inflation is not on the cards.

With economic growth in the currency bloc set to mark its best year in a decade, the ECB announced in October a cut to its monthly bond buying to €30 billion (RM145.31 billion) each month starting from January through to September. Currently it purchases bonds worth €60 billion each month.

While the central bank left the door open for an extension beyond September, ECB Governing Council members were split on that view, according to the minutes of October’s meeting released last week.

Some 34 of 52 economists who answered an additional question said the ECB “should” shut its quantitative easing programme in September.

While 52 of 60 economists who answered another question expect the central bank to stop its printing press by the end of next year, they were split if it would happen in September.

Only a handful of respondents expected the ECB to extend bond purchases beyond next year.

Without changing its own rules, the ECB has little choice but to close the programme next year, as it is nearing the limit of debt it can hold of some countries.

Robust momentum in the eurozone is expected to continue with predictions for positive economic growth, which has outpaced that of Britain and the United States, upgraded in the poll for this year, 2018 and 2019. Reuters