Reinesch thinks the ECB might need to cut short bond purchases

Reinesch thinks the ECB might need to cut short bond purchases ...

FRANKFURT, February 22 - Given rising inflation threats, the European Central Bank might have to terminate its bond purchases sooner than anticipated. According to ECB policymaker Gaston Reinesch, joining a growing number of rates-makers now openly discussing a curb in stimulus.

The European Central Bank has decided not to hike rates this year, and several policymakers have expressly advocated an end to bond purchases this year, which is a prerequisite for any rate rise.

Reinesch, one of the most well-known members of the ECB's Governing Council, said today's price fluctuations might boost wages while the economy might return to full capacity quicker than predicted, both of which may result in inflation pressures.

"It would not be entirely justified to think that the end of net asset purchases under the current Asset Purchase Programme might come sooner than it was anticipated, according to a blog post. Reinesch, the central bank governor of Luxembourg, said in a statement.

Despite the fact that inflation risks are mostly in the near future, higher readings are also possible further out, affecting the bank's policy horizon.

Policymakers from the European Central Bank will meet in an informal meeting in Paris on Thursday and hold their next policy meeting on March 10.

Economists polled by Reuters forecast policymakers to conclude bond purchases in the third quarter of the year, while the first rate rise may come in the third or fourth quarter.

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