ECB's Praet Says Not Yet Time For Tapering

ECB's Praet Says Not Yet Time For Tapering

The time has not yet come for the European Central Bank to start gradually winding down its massive monetary stimulus and the bank is being very careful with communicating its stance about the strong euro, ECB Chief Economist and Executive Board member Peter Praet said in an interview to the Belgian newspaper De Tijd, published on Saturday.

When asked if the time has come for the ECB to taper its stimulus, Praet said,”Not yet, we are saying.”

“This autumn we will decide on our policy next year,” he added.

The text of the interview was put on the ECB website.

Praet reiterated that the bank was more confident that inflation will increase towards its objective of 'below, but close to 2 percent', thanks to the very strong economic growth.

That said, underlying inflation remains too low and the ECB has to be patient and persevere with its policy, he added.

“A substantial stimulus is still necessary,” Praet said.

“Everyone agrees that we have to make sure that the reduction of the stimulus takes place in an orderly manner, without any excessive shocks.”

The policymaker also stressed that in the event of too high inflation, the ECB will “react just as ruthlessly” as now in order to get inflation back on track.

Regarding the strong euro, which the ECB has acknowledged as a source of concern, Praet said, “Our communication about the exchange rate is very careful.”

SOURCE

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