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ECB needs more evidence before deciding to cut stimulus, Jazbec says

Reuters  |  LJUBLJANA 

By Francesco Canepa and Marja Novak

LJUBLJANA (Reuters) - European Central policymakers need more economic evidence before they decide whether and how to reduce their monetary stimulus programme, rate-setter Bostjan said on Thursday.

After buying more than 2 trillion euros ($2.38 trillion)worth of bonds since 2015, the is expected to announce next month it will slow the pace of its purchases, since economic growth is accelerating and inflation is stable, albeit sluggish.

Slovenian governor highlighted the euro zone's positive economic performance and said a decision was now inevitable. But he added policymakers were waiting for more economic data to confirm that inflation was indeed heading towards its mandated target of almost 2 percent.

"We are still closely monitoring all developments, which are clearly going the way we expected," said in response to a question about the cutting its bond purchases.

No decision was made at last week's meeting, he said, "mainly because developments are in our view still not confirming the decision, which will inevitably follow. However, we need more data and more confirmation that what we are doing is in line with fulfilling our mandate."

Speaking earlier at the same event in Ljubljana, Belgian governor Jan Smets said inflation seemed to have bottomed out. He noted, though, that the rate-setters decided last week easy monetary was still needed.

Euro zone inflation is now reliably above 1 percent, and President Mario Draghi said he expected it to reach the ECB's target in 2020, after missing it since 2013.

But Draghi also emphasised uncertainty stemming from the euro's rally against the dollar and other major currencies, which could affect inflation by making imports cheaper and exports dearer.

played down this threat, arguing that the strong euro was evidence of the euro zone's economic vigour.

"I would believe that strong euro is a reflection of robustness of growth development," he said.

"Exchange rate developments are just confirmation of all the policies that we've been employing since 2014."

($1 = 0.8403 euros)

(Reporting By Francesco Canepa and Marja Novak; Editing by Larry King)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, September 14 2017. 16:22 IST
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