FRANKFURT (Reuters) - The following are key comments by European Central Bank Governing Council members ahead of Thursday’s interest rate meeting.
While ECB policy is seen firmly on hold, rate setters may debate removing a pledge to extend or expand asset buys if the outlook worsens, sources have told Reuters.
“As the economy continues to recover, a constant policy stance will become more accommodative, and the central bank can accompany the recovery by adjusting the parameters of its policy instruments – not in order to tighten the policy stance, but to keep it broadly unchanged.”
“Any adjustments to our stance have to be made gradually, and only when the improving dynamics that justify them appear sufficiently secure.”
“While there are still factors that are weighing on the path of inflation, at present they are mainly temporary factors that typically the central bank can look through.”
“Maintaining a steady hand continues to be critical to fostering a durable convergence of inflation toward our monetary policy aim.”
“We need to be persistent, because the baseline scenario for inflation going forward remains crucially contingent on very easy financing conditions which, to a large extent, depend on the current accommodative monetary policy stance.”
“As the economic prospects brighten, higher expected returns on business investment will make borrowing conditions increasingly attractive. This, as in our plans, will reinforce accommodation and make sure that inflation convergence develops strong foundations.”
MINUTES OF THE JUNE 7-8 POLICY MEETING
“While there were valid reasons at this juncture to retain the APP easing bias, it was noted that, as the economic expansion proceeded and if confidence in the inflation outlook improved further, the case for retaining this bias could be reviewed.”
“The Governing Council was well advised to adapt its forward guidance to the changing economic environment only very gradually.”
“It was cautioned that even small and incremental changes in the communication could be misperceived as signaling a more fundamental change in policy direction.”
“The increase in long-term interest rates is the result of consolidating growth. Governments and financial players must prepare themselves for it.”
“As early as last December, we scaled back our asset purchases without undermining the support given to the economy. So, I would argue that we have already adjusted our monetary policy, and this was made possible by the continued improvement in the economic situation.”
“Although inflation is not yet on a stable path towards our objective, all the conditions are in place. It is just a question of time and patience. That is why monetary policy should already be making preparations for a return to a normal stance. And it should adapt its communication accordingly.”
Reporting by Balazs Koranyi; Editing by Toby Chopra