Pedestrians walk past the euro sign sculpture as it stands outside the former European Central Bank (Photographer: Krisztian Bocsi/Bloomberg)

ECB Is Said to Assume Final QE Push Totaling 30 Billion Euros

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(Bloomberg) -- The European Central Bank’s internal staff calculations on the future path of monetary policy assume asset purchases totaling 30 billion euros ($37 billion) in the fourth quarter, according to euro-area officials familiar with the matter.

The assumptions are technical and don’t constitute a pre-commitment on bond buying past September, when the current program is scheduled to end, the people said. At the same time, there’s broad agreement among Governing Council members that quantitative easing should probably come to a halt by the end of 2018, said the people, asking not to be identified because the deliberations are private.

An ECB spokesman declined to comment.

Policy makers have long been in agreement that QE shouldn’t stop abruptly -- a view ECB President Mario Draghi has publicly voiced in the past. A 30 billion-euro extension in the final three months of the year would allow for a short taper. The current pace of purchases is about 90 billion euros a quarter, or 30 billion euros a month.

The council took a step toward unwinding stimulus on Thursday, removing a pledge to increase the pace of bond buying if needed, language first introduced in 2016.

It also started discussing changing its policy language on interest rates, a step likely to be taken later this year to manage investor expectations, according to the people. The debate was general and didn’t focus on any specific wording, they said.

Market expectations have been fairly stable since the ECB’s January meeting, and investors have fully priced in a hike for the second quarter of 2019. Economists surveyed before Thursday’s meeting also see the first rate increase at that time.

Council members took note of the market expectations and didn’t express any unease over the policy path they imply, according to the people.

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