Some ECB Officials Prefer June for Next Policy Shift

  • Others favor series of small tweaks in language starting March
  • No decision on adjusting forward guidance has been taken
Draghi Sees `Very Few Chances' of an ECB Rate Hike in 2018

As the European Central Bank considers when to start signaling the end of its crisis-era stimulus, some officials prefer delaying any significant change in language until June, according to people familiar with the matter.

While one faction of the Governing Council wants to start a series of small tweaks in their policy wording at the next meeting on March 8 -- setting them on the path to winding down their bond-buying program -- others prefer to gather more evidence that inflation will pick up, said the people, asking not to be identified because the debate was private. No decision has been taken, the people said.

The ECB’s current guidance links the outlook for quantitative easing to progress on bringing inflation sustainably back toward 2 percent. Waiting until June to shift that commitment to keep policy accommodative would surprise economists and investors, who mostly foresee action in March or the following meeting in April. While policy makers agree that their approach must be gradual, their informal discussions suggest that they’re still unsure how to proceed.

An ECB spokesman declined to comment.

ECB President Mario Draghi argued on Thursday that the differences between Governing Council members’ views were “much less substantive” than at previous occasions.

“We’re not talking about deep, existential differences,” he said. However, “there may be differences when to say certain things.”

Speculation about the ECB’s next policy step increased after an account of the December meeting revealed that officials “widely shared” the view that guidance would need to evolve gradually, with the first changes potentially already on the cards at the start of the year.  

When asked about those remarks at his press conference, Draghi said that at the time, “the only discussion that took place was about the need to have a discussion.” According to his official comments, the debate hasn’t made much progress since.

“The discussion hasn’t really started,” he told reporters after the ECB kept all parts of its stimulus unchanged. “We really went through events since October to now, trying to basically assess whether something has changed and there hasn’t been much of change, other than the continuing strengthening of the economy.”

Economists surveyed by Bloomberg before Thursday’s meeting predicted the Governing Council will change its forward guidance on asset purchases in March, before announcing a definite end date for QE in July. They forecast that bond-buying would be reduced to zero by December.

— With assistance by Piotr Skolimowski, and Zoe Schneeweiss

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