ECB must halt bond-buying, says Dutch bank governor
THE HAGUE: The European Central Bank must halt its bondbuying programme because it has done as much as it can to help power economic growth, the Dutch central bank governor said, sparking a market reaction.
“It must be stopped as soon as possible, because the bond-buying programme, if we look at it realistically, has done all that we could expect of it,” Klaas Knot, who sits on the European Central Bank’s governing council, told Dutch TV news show ‘Buitenhof’ in an interview.
His remarks caused an immediate price fall in European government bond markets, as investors wondered whether Knot’s remarks should be read as a sign that European Central Bank support for bonds will end soon.
Last week, the ECB left interest rates at historic lows and held fast to plans to buy 30 billion euros (US$37.2 billion) of government and corporate bonds per month until September, offering no hints about when it might step back from the mammoth stimulus programme.
The bank’s governors, led by President Mario Draghi, agreed at the talks in Frankfurt that they would even consider increasing or lengthening the programme, known as quantitative easing (QE).
However Knot insisted that “there is no reason to continue with this programme”.
The ECB commitment remains up to September “but after that, we should phase it out as quickly as possible. And that is what the market is also expecting,” he added. — AFP