BERLIN, March 6 (Reuters) - An upswing in the euro zone economy means the European Central Bank’s ultra-loose monetary policy is no longer needed, German banking association BdB said on Monday, while warning that a sudden unwinding of stimulus could jolt bond markets.
“Given the economic growth and prices outlook, the exceptionally strong monetary policy impulse provided by the European Central Bank (ECB) is no longer necessary,” the BdB said.
“There is however the common concern that a less expansive monetary policy will lead to an overreaction of the bond markets.”
Clear communication of its policy strategy would help the central bank deal with that risk, the BdB said.
The ECB, which holds a policy meeting on Thursday, is not likely to signal a shift away from its ultra-easy monetary until the latter part of this year or early 2018, a Reuters poll found on Thursday.
The BdB said it expected the German economy to growth by 1.4 percent this year, down from last year’s 1.9 percent mainly because of calendar effects. It expects growth of 1.6 percent next year.
It said the main economic risks were uncertainties linked to negotiations over Britain’s exit from the European Union, rising protectionism, and national elections in France, the Netherlands and Germany.
Reporting by Klaus Lauer; Writing by Joseph Nasr; editing by John Stonestreet
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