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Policymakers from the 19 euro zone countries discussed several
scenarios to prolong asset purchases, weighing any trade-off
between the size and duration of purchases, with some arguing
that any final decision should include a cut in asset buys.
With bond purchases due to expire at the end of the year, time
for a decision is running out and markets now expect buys to be
cut by a third to 40 billion euros a month and for the program
to be extended by six or nine months.
"Members also discussed some general trade-offs inherent in
various scenarios for the future recalibration of the asset
purchase program and, in particular, the choice between the pace
and the intended duration," the ECB said, describing the
discussion as preliminary.
"Within the framework of the Governing Council's forward
guidance, the benefits from a longer indented purchase horizon,
combined with a greater reduction in the pace, were compared
with those from a shorter period of purchases and larger monthly
volumes," the minutes said.
Rate-setters also noted that any change should apply to its
entire policy package and should not be limited to any
particular component, especially the size or duration of asset
buys.
While policymakers expressed increased confidence about the path
of inflation, some argued that the negative impact of the euro's
rally may have been underestimated, creating downside risks for
some inflation projections.
Indeed, chief economist Peter Praet called for "close
monitoring" of the exchange rate, a stronger phrase than was
eventually accepted when policymakers opted for only
"monitoring".
(Reporting by Balazs Koranyi; Editing by Gareth Jones)
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