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ECB hawks disagreed with bond largesse, inflation outlook -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO: Robert Holzmann, a policymaker at the European Central Bank and Governor of Austria’s National Bank (OeNB), attends a Vienna news conference on December 2, 2019, in Austria. REUTERS/Leonhard Foeger

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FRANKFURT – Sources close to the issue told Reuters that the European Central Bank decided to keep bond buying for many years, even though the governors of Germany, Belgium, Austria and Belgium disapproved.

The ECB slowed bond buying, but it also announced that proceeds from the Pandemic Emergency Purchase Programme would be reinvested until 2024.

Conservative policymakers opposed to ECB decisions have in the past argued the reinvestment horizon is too long. This makes it impossible for the ECB to bind itself far into future while inflation might end up higher that its target.

The conservators — Robert Holzmann in Austria, Pierre Wunsch in Belgium and Jens Widmann (Germany) — differed also on the outlook. They stressed that the forecast could be lower than the 1.8% for 2023-2024.

The ECB did not respond to our request for comment. For comment, the ECB could not reach Austrian, Belgian and German central banks immediately.

At Thursday’s meeting, Wunsch was not eligible to vote.

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