Investing.com - Easing back on the European Central Bank’s purchase buyback program was broadly supported by members but some did not want to give an end date, meeting minutes showed on Thursday.
Last month the ECB held interest rates while keeping asset purchases steady until the end of December. From January 2018, the central bank’s repurchasing program will continue at €30 billion a month, down from it’s current pace of €60 billion, until the end of September or beyond.
During its October meeting “different positions were put forward as to whether an open-ended state-contingent formulation remained appropriate or whether the announcement of an end date was preferable,” the minutes said.
Proponents of keeping the quantitative-easing-buyback end date open argued that giving an end date could hamper the central bank's ability to respond to future shocks, as well as “induce market participants to frontload possible price adjustments, which might lead to an undue tightening in financial conditions.”
Those in favour of an end data argued that the impact on financial markets would be limited and there “was no longer a case for an open-ended extension, unless deflation risks were to re-emerge.”
There were also concerns that an open-ended date could “generate expectations of further extensions as the intended end date of the programme approached.”
Members were also concerned about underlying inflation stagnating, but inflation was expected to gradually increase due to monetary policy accommodation, meeting minutes showed.
"It was suggested that the positive incoming information on activity provided the basis for greater confidence about the baseline outlook for inflation... [and that] measures of underlying inflation had remained stable despite the earlier appreciation of the euro," the meeting minutes said.