German Officials at ECB Led Opposition to Draghi’s QE

The two German members of the European Central Bank’s Governing Council led opposition to the expanded asset-purchase program that President Mario Draghi announced today, according to euro-area central-bank officials.

Bundesbank President Jens Weidmann and Executive Board member Sabine Lautenschlaeger were against implementing the plan now, said the people, who asked not to be identified because the deliberations were private. Klaas Knot of the Netherlands, Ewald Nowotny of Austria and Estonia’s Ardo Hansson also expressed reservations against starting the program at this time, the people said. An ECB spokesman declined to comment.

Draghi pledged today to buy assets worth at least 1.1 trillion euros ($1.3 trillion) to counter the threat of a deflationary spiral. A “large majority” of the 25-member council was in favor of action now, and Draghi said there was no formal vote on the matter.

The ECB committed to monthly purchases of 60 billion euros. That will probably comprise about 45 billion euros of sovereign debt, 5 billion euros of bonds issued by European institutions and agencies, and 10 billion euros under existing programs for asset-backed securities and covered bonds, one of the officials said.

The ECB envisages the purchases will boost the euro area’s inflation rate by 0.4 percentage point this year and 0.3 percentage point in 2016, one of the people said.

In December, the ECB forecast average annual increases in consumer prices of 0.7 percent in 2015 and 1.3 percent next year. Those projections don’t take into account the most recent oil-price slump.

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