FRANKFURT (Reuters) - The European Central Bank should be preparing for winding down stimulus and adapting its communication stance accordingly, even if inflation is not yet clearly on a stable upward path, ECB board member Sabine Lautenschlaeger said on Friday.
The conditions for rising inflation are in place and growth is accelerating so policymakers should be ready to claw back unprecedented stimulus measures, Lautenschlaeger, a German considered one of the top hawks on the rate-setting Governing Council said in Berlin.
ECB President Mario Draghi opened the door to policy tightening earlier this week, arguing that better growth conditions will naturally provide further accommodation, providing the ECB room to claw back its own stimulus.
“Although inflation is not yet on a stable path towards our objective, all the conditions are in place,” Lautenschlaeger, often at odds with Draghi, said. “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,” she added.
The ECB is expected to decide in September whether to extend or wind down its 2.3 trillion euro asset purchase scheme from next year, having to reconcile an apparent contradiction between healthy growth and weak inflation.
Inflation ticked down this month while all growth indicators suggest that the bloc is on its best economic run since before the global financial crisis.
“Even if no stable trend is visible as yet, it is important to prepare for different times, for there is reason to be optimistic,” Lautenschlaeger said.
“Against this backdrop, monetary policy has to adjust at the right time, which is as soon as inflation is on a stable path towards our objective,” she said.
Reporting by Balazs Koranyi, editing by Ed Osmond and Toby Davis