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The
ECB has maintained extraordinary stimulus for years to shore up
the currency bloc against deflation, and rising oil prices may
present a new challenge after the bank has spent years fighting
off the effect of collapsing energy costs.
"There is certainty more (inflation) upside than we would have
thought ...because the forecast was based on data up to the 24th
of November," Hansson told a press conference. "Knowing what we
know today, the outlook for inflation has upside risks."
Since then, oil producers have agreed an output cut and Brent
crude <LCOc1> has risen 14 percent to its highest level since
mid-2015 <EUIL5YF5Y=R>, while market based inflation
expectations are at a one-year high.
The ECB last week unexpectedly cut its monthly bond purchases,
aimed at boosting inflation, to 60 billion euros from 80 billion
euros starting in April, arguing the risk of deflation has
largely disappeared.
Responding to critics who argued that the ECB had reneged on its
promise to maintain monetary accommodation, Hansson said keeping
purchases at the same rate would have increased stimulus given
the bank's already huge, 3.6 trillion euro balance sheet.
Hansson's comments point to a debate within the ECB on the
future of the asset purchase program.
Hawkish policymakers argue that a commitment to maintaining an
accommodative policy is related to keeping an oversized balance
sheet, while doves say the issue is the monthly pace of the
purchases.
""In order to preserve accommodation when our balance sheet is
already the size it is, reducing the volumes is totally
consistent with preserving the stance," Hansson said.
(Reporting by David Mardiste; Writing by Balazs Koranyi; editing
by John Stonestreet)
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