QE opponents voiced rare dissent at ECB Dec meeting, minutes show

FRANKFURT (Reuters) - Opponents of the European Central Bank’s money-printing programme openly voiced their dissent at the ECB’s latest meeting, when the bank extended its stimulus programme despite improving economic conditions, accounts showed on Thursday.

The European Central Bank (ECB) headquarters is pictured in Frankfurt, Germany, December 8, 2016. REUTERS/Ralph Orlowski

With euro zone inflation rebounding, the ECB is facing calls, particularly in Germany, to pare back of its 2.3 trillion euros (£1.99 trillion) bond-buying scheme.

In a rare sign of open opposition, the minutes of the Dec. 7-8 meeting of the ECB’s Governing Council showed that “a few members” rejected both proposals on the table to continue purchases beyond March.

“A few members could not support either of the two options that had been proposed, while welcoming the scaling down of purchases,” the minutes showed.

Bundesbank President Jens Weidmann, the most prominent hawk on the ECB’s council, has publicly expressed scepticism about the bank’s purchasing of government bonds, which he sees as an emergency measure.

But the Frankfurt-based central bank, due to review its policy again next week, is unlikely to change tack soon, in a year fraught with political risk, including elections in key euro zone countries and the start of Britain’s negotiations to leave the European Union.

Overall, the minutes struck a balanced tone.

Policymakers highlighted risks, such as political uncertainty and bond market volatility.

But they also listed potential positives for the euro zone economy, including greater fiscal spending by Donald Trump’s new U.S. administration or even in the currency bloc itself.

“Against this background it was emphasised that, in such an uncertain and volatile environment, monetary policy was best advised to follow a ‘steady-hand’ approach that protected financial conditions in the euro area over the period ahead and allowed the recovery to mature and strengthen,” rate setters said in the minutes.

France, the Netherlands, Germany and possibly Italy will hold general elections this year, at a time when scepticism towards the euro project and globalisation is on the rise.


The ECB’s board had tabled plans to either extend purchases until December at 60 billion euros per month or until September at 80 billion euros, the minutes showed, confirming a Reuters report from the day after the meeting.

The first option was eventually chosen. It was interpreted by some economists as a first step towards winding down the programme, an idea that ECB President Mario Draghi has already dismissed.

In fact, the ECB said in the minutes it could raise the pace back to 80 billion euros per month or extend the scheme further if the economic outlook worsens or financing conditions tighten too far, as already reported by Reuters.

But it added that changes to how much of the debt of a single country or of any individual bond issue it can buy were not considered because they would raise legal, communication and reputational problems.

The central bank will decide on its policy again on Jan. 19, with no new move expected.

But pressure from Draghi’s critics to change the ECB’s course is mounting after December’s inflation readings for the euro zone showed a jump to a three-year peak of 1.1 percent.

As the bounce was mainly due to oil prices, board member Yves Mersch said last week it was too early to declare victory.

Editing by Hugh Lawson