AMSTERDAM, Nov 16 (Reuters) - The European Central Bank will follow a gradual path to normalisation, decreasing the emphasis on its 2.55 trillion euro bond buying programme as it unwinds its crisis-era stimulus, the head of the French central bank said on Thursday.
“We will clearly follow this path of gradual normalisation, with caution but combining the whole range of our instruments - and there shouldn’t be excessive focus on the net purchases of assets,” Francois Villeroy de Galhau, who sits on the ECB’s rate setting Governing Council, said in Amsterdam.
“But monetary policy cannot be the only game in town, and therefore we should not overburden it,” he added, just weeks after the ECB agreed to halve its asset purchases from the start of next year in the light of improved economic growth.
The ECB has argued that its oversized balance sheet now provides the bulk of accommodation needed to keep borrowing costs low and boost inflation so the role of new bond purchases is declining. (Reporting by Bart H. Meijer; Writing by Balazs Koranyi; Editing by Gareth Jones)