FRANKFURT The impact of the European Central Bank's 2.3 trillion-euro (£1.9 trillion) asset-buying scheme has been disappointing so far, but growth is picking up and the bank's presence in the market could absorb shocks, ECB chief economist Peter Praet told a Dutch Newspaper.
Begun nearly two years ago, the ECB has already bought around 1.5 trillion euros worth of bonds, mostly government debt. Inflation, however, is still set to undershoot its target of just below 2 percent at least through 2018, suggesting that the scheme has not worked as well as hoped.
"We see that growth is becoming more robust," Dutch newspaper Telegraaf quoted Praet as saying. "Employment is increasing; that means an improvement in disposable income and more consumption," Praet, who sits on the ECB's Executive Board, said in an interview.
"But the effect on inflation has been disappointing up to now," Praet added in a rare admission that the scheme, regularly criticized by Germany, the euro zone's biggest economy, is not working as well as hoped.
Still, Praet defended the ECB's decision last week to extend the asset buys until the end of next year, arguing that an early exit would weigh on inflation and the bank's extended presence in the market could cushion against future shocks.
"In recent years, we have seen that this can be very useful when shocks emerge. We have had Brexit, uncertainties related to US economic policy, and the shocks in emerging markets," Praet said.
"And most analysts say that past shocks would have had a much bigger impact if the ECB had not been active in order to absorb the shocks," he said.
(Reporting by Balazs Koranyi, editing by Larry King)