The ECB's thinking on QE
February 19, 2015
The European Central Bank's decision to launch a landmark stimulus program was a unanimous one but some of the bank's policymakers disagreed with the timing, newly released meeting records show.
On Thursday, the central bank published an account of the deliberations that took place ahead of the bank's historical decision to pump trillions of freshly printed euros into the eurozone economy to ward off the risk of deflation.
That account provided an unprecedented level of clarity about how the ECB's Governing Council weighed its members' reservations about printing money with a broad understanding that immediate action was needed.
"Due account would also need to be taken of the risks stemming from not acting at the present meeting, which might be higher than the risks stemming from acting," officials wrote in the account.
Some members warned of the risks of massive bond purchases, arguing that such action could have "potential destabilizing effects on financial markets."
"Spillovers from sovereign bond purchases not only into corporate bond prices, but also into equity prices, could trigger the mispricing of risk and feed financial market exuberance," the account stated.
An "account," not "minutes"
The meeting notes put the ECB on the same level as the United States Federal Reserve and the Bank of England, both of which publish minutes of their meetings.
The ECB decided last year to release records of its Governing Council meetings, which it intentionally avoids calling "minutes" because arguments are generally not sourced to specific people.
Unanimity is a sensitive matter for the ECB's policymakers, who hail from various eurozone countries and whose first loyalty is supposed to be to monetary policy for the good of the 19-member currency bloc - not their national governments.
The record of the Jan. 22 meeting outlined the council's decision to begin monthly bond purchases worth 60 billion euros ($68.3 billion) until September 2016, rather than an earlier proposal involving 50 billion-euro purchases until the end of 2016.
There was broad agreement that already existing stimulus measures had been less effective than planned. Members thought markets would react better to a stronger jolt over a shorter period of time rather than a less intense one that lasted a few months longer. Either way, the amount of stimulus would have been the same.
cjc/uhe (Reuters, AP)