BRUSSELS • European Central Bank (ECB) policymakers brushed off concerns over recent weakness in economic data, including inflation, saying they’re increasingly optimistic about reaching their goal.
Comments by Executive Board member Yves Mersch and Governing Council member Vitas Vasiliauskas were published yesterday by Eurofi, which is convening a meeting of financial regulators.
“Confidence has recently risen and convergence is being confirmed — partly because the temporary decline in the inflation rate has been weaker than our internal calculations had predicted,” Mersch said. “More resilience will follow eventually. Still, patience and persistence with respect to our monetary policy is required.”
Vasiliauskas, who heads the Lithuanian central bank, said his confidence has increased that it’s time to phase out the ECB’s bond-buying programme.
Euro-area inflation slowed to 1.1% in February, compared to a medium-term goal of just under 2%. March’s figure, released after the articles were submitted to Eurofi, was unexpectedly revised to 1.3% from an initial estimate of 1.4%.
“We have witnessed the strengthening of broad-based growth and steadily declining unemployment, providing conditions for inflation convergence to our objective,” Vasiliauskas said.
“This has increased my confidence that it is time to transition from the asset purchase programme. However, the closure of the programme should not be abrupt.”
Economists don’t expect major changes when the Governing Council issues its policy statement and president Mario Draghi addresses reporters today.
Vasiliauskas said the ECB should tackle the question of the size of the balance sheet after normalisation.
Policymakers intend to “cautiously reduce the balance sheet in favour of financial-market functioning”, he said. “However, the balance sheet might remain larger than it was before the financial crisis.” — Bloomberg