The European Central Bank kept policy unchanged on Thursday and ECB chief Mario Draghi is expected to play down worries over recent softness in the euro zone economy, leaving the door open to ending lavish bond purchases by the close of the year, Reuters reports.
Having tweaked its guidance last month to reflect solid growth, Draghi is expected to argue that the economy is humming along and that the exceptional growth readings seen around the turn of the year were never expected to be sustained.
Indeed, with the 19-country bloc’s economy expanding for 20 straight quarters and millions of new jobs created, the main debate among policymakers is about how quickly to withdraw stimulus and preserve ECB firepower for the next downturn.
In particular, policymakers will need to agree an end-date for the ECB’s 2.55 trillion euro ($3.10 trillion) bond purchase program, which has cut borrowing costs and kick-started growth, even if it has failed to lift inflation back to target.
With Thursday’s decision, the ECB’s bond purchases, aimed at stimulating growth and inflation through rock-bottom debt costs, will continue at 30 billion euros a month at least until the end of September, or beyond if needed to prop up inflation.