ECB hawks wanted to signal change to stimulus pledge at meeting – sources

A minority of European Central Bank policymakers meeting on Thursday wanted to signal that the ECB may change its easy-money pledge if euro zone inflation keeps accelerating, two sources close to the matter said.

But these ‘hawks’ were outnumbered as most rate setters opted to simply repeat the ECB’s plan to keep buying bonds at least until September and to keep rates at rock-bottom well after that, the central bank sources said.

“Some people wanted to say that if inflation continues to increase, we will be forced to change the forward guidance perhaps,” one of the sources said.

Better-than-expected growth and, to a lesser extent, inflation are giving fresh ammunition to critics of the ECB’s 2.55 trillion euro (£2.3 trillion) bond-buying programme, such as Dutch central bank governor Klaas Knot.

But his view that the bond-buying scheme had “simply run its course” was not shared by the majority of the ECB’s Governing Council, Draghi told a news conference on Thursday.

The ECB declined to comment.

While the debate was not heated, policy ‘hawks’ were angling for some concessions in the policy message to acknowledge the better economic outlook but they won none, the sources said.

Their suggestions included dropping a pledge to continue to buy bonds until inflation converges to the ECB’s target of almost 2 percent or the option to increase purchases if the outlook worsens, one of the sources said.
Source: Reuters (Reporting By Francesco Canepa and Frank Siebelt; Editing by Hugh Lawson)