Editorial Board

Euro-Zone Tapering Is a Delicate Task

The European Central Bank has to scale back quantitative easing without spooking investors.

October 25, 2017 at 6:30 AM UTC

By The Editorial Board

The Editorial Board publishes the views of the editors across a range of national and global affairs.

Mario Draghi has a needle to thread.
Photographer: Andrew Harrer/Bloomberg via Getty Images

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On Thursday, the European Central Bank is expected to announce changes to its program of quantitative easing. The threat of outright deflation in the euro zone has eased, so changes are indeed required. The ECB should start getting monetary policy back to normal by scaling back its asset purchases.

This could be a delicate task. Inflation is still well below target, so too abrupt a transition would be risky. Removing monetary stimulus faster than investors expect might cause the euro to appreciate too much -- in effect, tightening policy more than intended. Clear and consistent messaging from the central bank and its president, Mario Draghi, will be essential.