ECB's Coeure Expects Talks Soon on Policy Wording for Stimulus

(Bloomberg) -- European Central Bank policy maker Benoit Coeure signaled that officials are close to starting talks on altering their policy language as they prepare for the eventual end of bond purchases.

“Our communication on monetary policy will change” Coeure told reporters on Friday in Skopje, Macedonia. “Certainly the expectation is that this will be discussed in early 2018.”

The ECB is trying to find the right time to signal that the euro area’s broadest-ever economic expansion warrants halting asset-buying and preparing for higher interest rates. At the same time, still-weak inflation and recent volatility in global markets is making officials cautious of even holding formal talks on the matter.

The Governing Council will hold its second policy meeting of the year on March 8 in Frankfurt, with the following session scheduled for April 26. Bond purchases are currently set to to run until at least September and take total holdings to 2.55 trillion euros ($3.2 trillion).

Coeure has previously said he hopes the latest extension will be the last. In Skopje, he ruled out any chance that the Governing Council will raise interest rates before bond-buying -- other than reinvestments of maturing debt -- comes to a stop.

“We have a clear expectation in the Governing Council, we have a clear sequence meaning that policy rates won’t be hiked before the end of the asset purchases,” he said. “There is unanimity in the Governing Council on upholding this sequence.”

Coeure, who is responsible for the ECB’s market operations, said there is no reason to panic about the market downturn, which he described as a “global correction originating primarily in the U.S.” The impact on the euro area has been orderly and largely contained to equity markets, he said.

©2018 Bloomberg L.P.

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