ECB's Nowotny sees summer decision to slash bond purchases

[March 27, 2018]  VIENNA (Reuters) - The European Central Bank will probably decide this summer to slash its bond purchases if things develop as expected, policymaker Ewald Nowotny said on Tuesday, warning that the ECB must not fall "behind the curve".

 European Central Bank (ECB) Governing Council member and OeNB governor Ewald Nowotny addresses a news conference in Vienna, Austria, June 9, 2017. REUTERS/Leonhard Foeger

The ECB said this month it could still extend its 2.55 trillion euro ($3.17 trillion) bond purchase scheme beyond September if needed. But it skipped a reference to bigger purchases, a signal that it remains on track to end a three-year-old stimulus scheme before the end of 2018.

"This purchase programme runs until the end of September 2018. We will have to decide in summer what happens next," Nowotny, who as governor of the Austrian National Bank sits on the ECB's Governing Council, told a news conference.

"And I think that if we have a situation like the one we now expect ... that we will have the possibility to reduce this programme significantly and head towards an end of the programme," he added

Asked what lessons he drew from the U.S. Federal Reserve's earlier cutting of bond purchases and raising of interest rates, he said: "One is to act when it is necessary ... to avoid being behind the curve.

"So, to wait too long is problematic. But another is to approach steps very cautiously and communicate in time."

($1 = 0.8057 euros)

(Reporting by Francois Murphy; Editing by Catherine Evans)

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