ECB Officials Are Said to Not Rule Out June Meeting to Tweak QE

(Bloomberg) -- European Central Bank policy makers aren’t yet ruling out the prospect of moving further toward a wind down of stimulus as soon as June, according to euro-zone officials with knowledge of the matter.

Members of the Governing Council remain confident that the economy is in a robust growth phase, according to the people, who asked not to be identified because such discussions are private. They said officials are currently keeping the option open of acting at their next meeting on June 14 as well as the option of waiting until July.

The decision next month is the first since euro-zone growth data confirmed a slowdown at the start of the year, and comes after the emergence of a populist euro-skeptic coalition forming in Italy. It will feature quarterly forecasts, which officials have used in the past to inform them at major policy junctures.

The Governing Council hasn’t yet officially started a conversation on whether and how to extend its 2.6 trillion-euro ($3 trillion) bond-buying program after the current scheduled phase concludes in September. President Mario Draghi has said quantitative easing won’t end abruptly, and investors are betting on a short taper until the end of December with a first rate hike coming about six months later.

Even so, the question remains open on when the ECB will decide to announce its next steps to investors. Another issue is how policy makers will guide on future interest-rate movements after the end of QE. For now, officials say no hike will come before “well past” the end of net asset purchases.

An ECB spokesman declined to comment on the Governing Council’s future decisions.

The prospect of a euro-skeptic government taking power in Italy is being watched warily by policy makers as they evaluate the risk that rising sovereign yields pose to the euro area as a whole and that sinking confidence may eventually weaken the region’s growth momentum. Even so, Governing Council members have repeated in recent days that it is too early to pass judgment on the future plans of prime minister Giuseppe Conte.

Finnish Governor Erkki Liikanen said in an interview with Bloomberg TV on Friday that events in a single country have never swayed ECB decisions in his 14 years as a Governing Council member.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With OnWeb News On BloombergQuint