FRANKFURT The European Central Bank should start reviewing in June its pledge for continued, ultra-easy policy if economic data confirm that the recovery is becoming durable, ECB policymaker Vitas Vasiliauskas told Reuters on Thursday.
The Lithuanian central bank governor said he expected the beginning of a discussion about the ECB's guidance, which foresees bond purchases at least until December and interest rates at current or even lower levels until well after that.
He also anticipated the ECB discussing whether risks to the euro zone economic outlook had become balanced, rather than predominantly negative.
"We face a better geopolitical situation so then we can expect discussions not only on the forward guidance but also on the balance of risk," Vasiliauskas told Reuters. "If hard data confirms our improved situation, then the logical step would be to discuss the easing bias."
With euro zone inflation now just under 2 percent and growth on its best run for years, the ECB is coming under pressure from more conservative countries to start plotting the exit from its extraordinary stimulus, which has included 2.3 trillion euro ($2.6 trillion) worth of bond buys and negative rates.
Still, Vasiliauskas said the ECB should move only gradually, keeping its policy as predictable as possible to avoid generating unnecessary turbulence.
"The balance of risk (discussion) is the first priority," he said.
Vasiliauskas also dismissed an argument by some policymakers that interest rates could start rising before the end of asset buys, sticking with the ECB's pledge to end bond purchases first and only then touch interest rates.
He said other major central banks have also followed this path and the ECB should not risk devising a new path.
If the euro zone's recovery continues, Vasiliauskas added, the ECB should also consider winding down its asset purchases from next year.
"It’s quite clear that we do not have to continue if the environment remains supportive," he said. "We of course haven’t had that discussion (but) if hard data confirm our positive direction, then I think everybody will agree that we should discuss the future of the program."
He would not be drawn on how the asset purchases could be wound down but said it must be done "gradually".
More conservative euro zone members such as Germany, the Netherlands and some Baltic states have long been skeptical of the asset buys, arguing that they stretch the mandate of the central bank while their effectiveness is far from clear.
(Editing by Gareth Jones)