ECB Should Be Predictable on Stimulus Exit, Vasiliauskas Says

  • Lithuanian Governing Council member speaks in interview
  • Says QE must end before discussing other possible actions

The European Central Bank should communicate clearly and stick to its plan as it prepares to exit from unprecedented stimulus, according to Governing Council member Vitas Vasiliauskas.

“We should be as predictable as we can be,” Vasiliauskas, who is governor of Bank of Lithuania, said in an a telephone interview. “We should keep our forward guidance. Our forward guidance is very clear: we first end the asset-purchase-program phase and only then can we discuss other possible actions.”

Vitas Vasiliauskas

Photographer: Peter Kollanyi/Bloomberg

President Mario Draghi pushed back on Thursday against market expectations that the ECB could change the sequence of its exit, which currently foresees a pause between the end of quantitative easing and potential rate hikes. An accelerating recovery and a pickup in inflation, as well as somewhat mixed signals from some policy makers, have added to speculation in recent weeks that higher borrowing costs could come sooner than anticipated.

While the ECB is “near” its goal on price growth, Vasilauskas said that interest rates have not been discussed in the most recent meetings.

“Currently it would be premature even to discuss” removing a pledge that rates could be cut again if needed, he said. “We should concentrate on the asset-purchase program. Only then we can think, discuss live possible actions.”

As it maps its way out of four years of unprecedented stimulus, Vasiliauskas said the ECB could look at the example of other central banks, including the Bank of England. 

At the U.K. central bank, a number of policy makers, including Governor Mark Carney, have outlined how its unwind will take place. They say the BOE won’t roll back its asset purchases until the key interest rate has been raised high enough to be a flexible tool. 

— With assistance by Carolynn Look, and Brian Swint

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