ECB’s QT Should Be ‘Very Gradual and Predictable,’ De Cos Says

The European Central Bank should move very carefully when it begins shrinking its balance sheet to avoid negatively affecting sovereign-debt premiums, according to Governing Council member Pablo Hernandez de Cos.

Lingering questions about the true impact of quantitative easing “point, in my view, to the need for the balance-sheet reduction in the euro area to be very gradual and predictable,” de Cos said Wednesday in a speech. “It is also essential that balance-sheet reductions leave room for action against fragmentation if it reappears.”