March 27 Two senior European Central Bank
policymakers expressed diverging views on the bank's ultra-loose
monetary policy on Monday, laying bare the rift at the top
between supporters and critics of the direction the bank has
taken under President Mario Draghi.
Peter Praet, the ECB's chief economist and a key ally of
Draghi's, argued that the euro zone still needs substantial
But his fellow ECB Executive Board member Sabine
Lautenschlaeger, a German who tends to side with more
conservative rate-setters, said the bank should start making
plans for an eventual end to its current extraordinary stimulus.
With inflation rising largely due to higher oil prices and
economic growth accelerating, critics of the ECB's ultra-easy
monetary policy have been arguing for the need to step off the
accelerator or at least start talking about eventually exiting
the current policy.
"We should prepare for a change in the policy and as soon as
the data is stable and we have a sustainable path towards our
objective of price stability, then we are well prepared to do,"
Lautenschlaeger told CNBC.
An outspoken policy conservative, Lautenschlaeger said that
if economic data remain supportive, the ECB could discuss and
decide on its next step after June.
Chief economist Peter Praet struck a more dovish tone,
warning that the inflation rise could stall or even reverse if
the ECB removed stimulus too early.
"We need to look through the recent surge in inflation,
which is driven by transient factors that will probably fade
before long," Praet said in Madrid.
"Our conclusion that a very substantial degree of monetary
accommodation is still needed for underlying inflation pressures
to build up and support headline inflation in the medium term
remains valid," Praet added.
Still, Praet said he expected the bloc's economic recovery
to continue and broaden with improving consumer and business
sentiment suggesting that the cyclical recovery is gaining
The ECB's policy-setting Governing Council next meets on
April 27. Its asset buying is set to run until the end of the
year, and the bank said it expects rates to stay at their
current or lower levels until after the end of the bond
(Reporting by Balazs Koranyi and Andreas Framke; Editing by