ECB officials signal pause on more stimulus

Two policy makers signaled the European Central Bank is in no rush to further expand monetary stimulus as they urged a deeper rethink of their strategy.

Speaking in Frankfurt on Thursday, France’s Francois Villeroy de Galhau suggested interest rates are unlikely to fall much further, though they won’t rise soon either unless governments such as Germany spend more. His Dutch colleague Klaas Knot argued the ECB should be more cautious with using unconventional tools such as quantitative easing.

“Monetary policy may wish to display more inertia – by which I mean caution or carefulness – in deploying policy instruments on those fronts where our knowledge is less developed,” Knot said in Frankfurt. “This applies to less conventional policy tools, of which the effects are still not fully appreciated, both in phasing-in and the phasing-out.”


Villeroy and Knot were among a third of the ECB’s Governing Council to oppose restarting bond purchases as part of a stimulus package announced in September that sparked an unprecedented public row among officials.

Overcoming those differences has become the first order of business for new ECB President Christine Lagarde. She has already promised to launch a review of the institution’s policy strategy that will involve all of her colleagues from early on.

Both governors expressed their support for a rethink on Thursday.