PARIS, (Reuters) – Francois Villeroy-de Galhau from the European Central Bank said that some flexibility should be retained by it under its pandemic asset purchasing programme.

As the ECB was widely anticipated to end its emergency bond purchases in March it has started a debate about how much debt it will continue purchasing under its regular assets purchase programme (APP). It is expected that a decision will be made in December.

Villeroy said that the APP may benefit from some flexibility in purchases, over time, more than just increased fixed volume. Villeroy made this statement at an online conference.

Villeroy indicated that despite a recent rise in inflation Villeroy felt there was a bigger chance the ECB would miss its 2% goal in 2023. Villeroy suggested keeping monetary policies loose.

He said that exiting the ECB’s Pandemic Emergency Purchase Programme of (PEPP), through which it has pumped 1.4 billion euros ($1.6 trillion) to the bond market in March 2020, wouldn’t mean its end of accommodative monetary politio.

Villeroy stated that the PEPP’s ability to be flexible across jurisdictions and asset classes was a strong way for liquidity to flow to the economy in times of crisis.

Villeroy explained that “this allows us to interfere more effectively in certain market segments when they are most necessary, and to avoid unwarranted fragmentation.”

The PEPP gives the ECB more flexibility than the APP. It allows the ECB to buy assets at a lower cost and in a shorter time frame.

($1 = 0.8655 euros)