PARIS (Reuters) – Relaunching the European Central Bank’s bond purchasing program is open to debate at the current juncture, ECB policymaker Francois Villeroy de Galhau said in an interview released on Tuesday, questioning its merit.
In an interview with French newspaper l’Agefi, Villeroy said uncertainty over U.S. trade policy was in large part to be blamed for fueling uncertainty at the source of the current economic slowdown.
The European Central Bank is set to debate later this month what steps to take in the face of slowing growth and inflation, which has stubbornly come in short of its 2 percent target.
“Net asset purchases will remain an essential instrument of monetary policy. They are working powerfully: the ECB holds in its balance sheet a stock of almost 2.6 trillion euros and will maintain that elevated level for at least several years,” Villeroy, who is also head of the French central bank, told l’Agefi.
“It also has the option of re-starting net asset purchases at any time. Is it necessary to do so just now? This is a question to be discussed,” he added.
Villeroy said that current priority for the ECB was “to better anchor inflation expectations to our target”, which he said should be done by revisiting its forward guidance on the path for short-term interest rates.
In particular, the ECB could be more precise by what it means when it refers to the “continued sustained convergence of inflation to our aim over the medium-term”, Villeroy said.
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