ECB more confident of weaning euro zone off crisis-era support
Bank on track to end €2.5 trillion quantitative easing programme this year
ECB president Mario Draghi. The bank stressed the need for “patience” in removing monetary support too quickly. Photograph: Bloomberg
The European Central Bank has become increasingly confident that it can wean the euro zone off some of its crisis-era support without endangering the region’s economy.
According to minutes published on Thursday from the July 26th meeting of the bank’s governing council, the euro zone was set to grow at a “solid pace”, with the risks to the outlook “broadly balanced” despite the threat of a global trade war.
The ECB remains on track to end its €2.5 trillion quantitative easing programme by the end of 2018. But the bank, scarred by years of stunted growth and low inflation in the euro zone, remains cautious, stressing the need for “patience” in removing monetary support too quickly.
Yet ECB policymakers appeared increasingly convinced that inflation was now finally on course to return to levels consistent with their goal of just under 2 per cent.
Peter Praet, the ECB’s chief economist and president Mario Draghi’s closest ally in the governing council, said “inflation dynamics had gained some momentum”, with policymakers’ faith in the economic outlook “bolstered” by signs that trade unions across the single currency area were negotiating better pay deals for their workers. This will eventually translate into higher inflation.
– Copyright The Financial Times Limited 2018