Bundesbank's Dombret says inflation recovery 'muted'

[August 14, 2017]  FRANKFURT (Reuters) - The European Central Bank's easy-money policy is "very much justified" because a recovery in euro zone inflation remains muted, Andreas Dombret, a director at Germany's Bundesbank, said on Monday.

 Andreas Dombret, member of the board of the Deutsche Bundesbank speaks during a news conference in Frankfurt, Germany, October 26, 2014. REUTERS/Ralph Orlowski/File Photo

Dombret's comments suggest the Bundesbank - which has long criticized the ECB ultra-easy policy of massive bond purchases and sub-zero interest rates - would be unlikely to push for an abrupt tightening when rate setters meet again in the autumn.

"The signs of a sustained turnaround in terms of inflation are muted, so far," Dombret said in a speech in Pretoria, South Africa.

"There is therefore a broad consensus on the whole that an

expansionary monetary policy is very much justified."

Dombret said views differed among ECB rate setters on the degree of support.

"Where perspectives do differ, though, is on how strongly the ECB should step on the monetary policy pedal and what instruments it should use," he said.

ECB policymakers are due to discuss the future of their 2.3 trillion euros ($2.71 trillion) bond-buying program, with a decision expected in October.

Market expectations are for an extension of the program, albeit at a lower pace than the current 60 billion euros per month.

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