(Bloomberg) — The European Central Bank should consider keeping some of the flexibility of its pandemic bond-buying program for future asset purchases, according to Governing Council member Francois Villeroy de Galhau. 

The Bank of France’s governor spoke in video to a conference that inflation is expected to continue falling below the target of 2% in the medium term. He also stated that monetary policy would remain flexible even after the end of the 1.85 trillion euro ($2.14 Trillion) emergency plan. 

Villeroy wanted to emphasize how the ECB could preserve certain aspects of this program. PEPP can be used across assets and within jurisdictions, making it more flexible than regular quantitative easing. It also isn’t set to monthly amounts, allowing policy makers to react to shifts in financial conditions when and where they occur.

“It could be worth examining if and how at least some elements of this PEPP flexibility should be kept in our ‘virtual’ toolbox,” Villeroy said on Tuesday. “Their mere existence, the theoretical possibility of their use, would mean that we would probably not have to actually use them.”

The comments hint at a likely fault line in the debate building at the ECB, where some of Villeroy’s colleagues are less open to the use of future stimulus on such terms. In an example of that reluctance, Estonian Governor Madis Muller said last month that “I don’t think we can take the flexibility that was there for PEPP and just transfer it.”

The ECB is currently preparing for a transition from post-pandemic stimulative. According to sources familiar with the matter, it is currently studying a new program for bond buying to avoid market turmoil after emergency purchases cease. 

In December, a decision will be made. It is expected to include an increase of regular monthly bond buying, according to economists.

“The Asset Purchase Program might benefit, still more than from increased fixed volumes, from adding some forms of flexibility of purchases over time,” Villeroy said.

The Frenchman added he’d be in favor of keeping targeted long-term loans to banks as a “liquidity backstop.” A “careful recalibration” of their terms is needed though, he said. Currently, the ECB pays financial institutions if they meet certain lending conditions.

‘Rule Based’

Villeroy also said he’d support a “more rule-based approach” — considering changes in excess liquidity net of both necessary and borrowed reserves — when setting a tiering multiplier. 

The ECB started exempting some of banks’ holdings from its negative deposit rate two years ago to alleviate pressure on profitability.

Villeroy stated that the growth rate in the Euro area was stronger than anticipated and that the economy will surpass its pre-Covid levels by the end. At the same, the uncertainty surrounding the inflation outlook has grown.

Consumer prices are currently increasing at an annual pace of 3.4%, far faster than the ECB’s 2% goal. Officials insist the price rise is temporary. However, recent warnings from officials have suggested that it could be even more severe.

Supply bottlenecks should fade over the coming quarters, Villeroy said, “but the exact timing is uncertain.” Moreover, there are only “few signs” a wage-price spiral that could feed inflation sustainably.

“From this point of view, it is clear that the risk remains that we fall short of our inflation target in 2023 rather than exceed it,” he said. “This calls for a continued accommodative monetary policy.”