FRANKFURT (Reuters) -The European Central Bank should not reduce the pace of asset purchases from next month, ECB board member Fabio Panetta said on Wednesday, joining a growing chorus of policymakers calling for continued stimulus.
With the recovery now well underway, pressure is growing on the ECB to start curbing its emergency measures. But several key policymakers have pushed back in recent days, suggesting that any reduction in asset buys after the June 10 policy meeting is highly unlikely.
“The conditions that we see today do not justify reducing the pace of purchases, and a discussion about phasing out the PEPP (Pandemic Emergency Purchase Programme) is still clearly premature,” Panetta told Nikkei in an interview.
“In fact, we are now seeing a further undesirable increase in yields after the rise we observed earlier in the year,” he added, warning that higher yields and the associated appreciation of the euro weaken inflation, countering the ECB’s aims.
Greek central bank chief Yannis Stournaras made a similar call on Tuesday while ECB President Christine Lagarde said last week that any talk of tapering was premature.
The ECB’s 1.85 trillion euro ($2.27 trillion) PEPP, set to run until the end of March, should first neutralise the effects of the pandemic on inflation, Panetta said, then needs to ensure that price pressures become more sustainable.
“We are far from the point where we can see self-sustained growth,” Panetta said. “A premature withdrawal of policy support would risk suffocating the recovery.”
($1 = 0.8163 euros)
(Reporting by Balazs Koranyi; Editing by Andrew Heavens)