ECB's Villeroy: End of Net Asset Purchases Will Not Mean the End of ECB's Monetary Stimulus
The Governing Council of the European Central Bank will hold its final policy meeting of the year on December 13, when it will review the plan to cap its 2.6 trillion-euro ($2.9 trillion) bond-buying program. While that decision was initially taken in June, it’s always been dependent on incoming economic data, which have recently been weaker than expected.
Completion of the ECB’s bond buying program next month will pave the way to raise interest rates for the first time in eight years, as part of a long path toward monetary policy normalization.
Francois Villeroy de Galhau (ECB Governor Council member and the Bank of France Governor) stated, that the ECB’s monetary policy will stay easy even after it probably stops adding to its pile of bonds next month and it can adapt its policy normalization as needed. "Net purchases will very probably end in December. The end of our net asset purchases will not, however, mean the end of our monetary stimulus, far from it," Villeroy said.
In terms of the sequencing, Villeroy said he preferred to slow the rate of reinvestment only after the first interest rate increase.