ECB’s Coeure Says He Sees Broad Consensus for Fresh StimulusPaul Gordon
European Central Bank Executive Board member Benoit Coeure reiterated his view that there is broad consensus among policy makers for new stimulus to revive euro-area inflation.
The comments in an interview with the Wall Street Journal reflect the ECB’s work on a quantitative-easing package for discussion at the Jan. 22 monetary-policy meeting. He indicated that the program has not yet been designed and may have to be crafted to allay objections by some officials.
“It’s not that much of a question on whether we should do something, but more a discussion on the best way to do it,” Coeure said. “The more governors standing by this new instrument, the safer you feel that the pros and cons have been weighed in the right way. We need to design a solution in a way that mitigates the concerns of as many people around the table as possible.”
The euro area is facing renewed downward pressure on already low inflation from plunging oil prices that could tip the rate below zero. While some policy makers fear that could be the trigger for a deflationary spiral, others led by German officials have urged the ECB to treat lower energy costs as a stimulus and hold off from QE.
More than 90 percent of economists in Bloomberg’s monthly survey predict the ECB will start QE next year, probably in the first quarter. Coeure said that any package is likely to include sovereign bonds, without relying exclusively on them.
“If we want to do more we obviously have to reach out to market segments where there is more liquidity, and that is why the government-bond market is the baseline option, which doesn’t necessarily mean we would only buy government bonds,” he said. “That’s a discussion we will have in the Governing Council.”
Coeure also told L’Opinion in an interview published yesterday that he sees broad consensus in the Governing Council for action. The euro weakened after today’s remarks were published and traded at $1.2402, down 0.9 percent, at 5:12 p.m. Frankfurt time.