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Business

ECB minutes reveal no QE tapering in the cards

Accounts of the ECB's last meeting in April show the central bank for the euro area remains committed to its massive monetary stimulus despite accelerating growth and rumors of an early roll-back of the program.

The minutes of the European Central Bank's (ECB's) April 15 policy meeting released Thursday said the members of the bank's Governing Council "generally agreed that a steady hand and the firm implementation of the measures would best serve to support the economic recovery and a return of inflation towards 2.0 percent."

As a result, the ECB found "no need to consider any change" in its monetary policy stance or to "reconsider any of the parameters of the asset purchase program," known as quantitative easing (QE).

In January, the bank announced it would embark on a massive 1.14 trillion-euro ($1.3-trillion) bond-buying program aimed at driving the inflation rate in the eurozone up to the desired level of 2 percent, which the ECB deems consistent with a healthy economy. Under the program, the bank wants to buy 60 billion euros of bonds per month until September 2016.

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The date was confirmed in the minutes as the Governing Council "reaffirmed its intention to conduct the purchases until the end of September 2016," stating that the program would continue "in any case until a sustained adjustment was visible in the path of inflation."

Muted criticism

The ECB actually launched the program in March. Since then, QE has already started showing the desired effect of rising inflation in Germany and France.

This has led to initial criticism, notably from Jens Weidmann, the head of the German central bank, who fears the cash injection might lessen pressure on debt-laden eurozone countries to reform their economies. Moreover, the program's early success has fuelled speculation that QE opponents could argue for an early roll-back as the eurozone recovery picks up speed.

The minutes from the ECB meeting, however, suggest this is not going to happen.

"While there was a case for guarded optimism on the short to medium-term outlook for the euro area economy, taking into account initial evidence that the monetary policy measures were proving effective, it was important to remain cautious," the minutes read.

The Governing Council also pointed out that it was only one month into the program and that "the outlook for growth and inflation was conditional on the full implementation of all the monetary policy measures that had been decided."

However, the policy-setting panel felt that a "strong signal" needed to be sent to eurozone governments "to press ahead with structural reforms."

"Only with such complementary action could the full benefits of the monetary policy measures be reaped," the ECB insisted.

uhe/cjc (AP, AFP, Reuters, dpa)

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