Nowotny (ECB): Decision this summer on the asset purchase program

VIENNA (Reuters) – The european central Bank is likely to take this summer the decision to significantly reduce its asset purchases if the situation evolves as expected, said on Tuesday Ewald Nowotny, governor of the bank of Austria.

The ECB said on march 8 that it could still extend its quantitative easing program of some 2,550 billion euros beyond September if necessary, but it any more has not made mention of a possible increase of its purchases, a sign that it the end of the program is always in sight for the end of the year after three years of money creation.

“The asset-purchase program runs until the end of September. We’ll have to decide this summer of the sequel. And I think if we have a situation like the one that we expect now (…) we will then have the possibility of reducing the program significantly, and we head towards the end of the program,” said Nowotny during a press conference in Vienna.

Speaking also on Tuesday, Erkki Liikanen, the governor of the Bank of Finland, stressed that the ECB had to show patience before withdrawing its support measures.

“A progressive tightening of monetary policy will be based on more solid foundations when the indications of an inflation rate may temporarily exceed 2% of them will be more tangible in inflation expectations”, he said in Helsinki.

(Francois Murphy, with Jussi Rosendahl in Helsinki, Véronique Tison for the French service)