LONDON (Reuters) - Waiting too long to halt monetary policy stimulus could be disruptive, a European Central Bank policymaker said on Wednesday, adding that a more supportive euro zone economy justified a shift in the central bank’s policies.
“I think there’s a danger of erring on the other side,” the ECB’s Ardo Hansson said. “And if you wait too long, you’re going to have to play catch-up, and that can be much more disruptive.”
“With greater confidence in the outlook for the real economy there is some scope for a prudent but obvious recalibration of policies,” Hansson said at a banking conference hosted by UBS.
“The world looks better to us,” said Hansson, Estonia’s ECB member, who is considered one of its more hawkish ratesetters. The euro zone economy was enjoying “strong” growth, he said, and the ECB feels “more and more confident” that inflation will reach desired levels.
The ECB’s array of monetary policy tools should not be limited to asset purchases, Hansson said.
“Monetary policy is not only about asset purchases. We can’t make the stance of policy synonymous with one important but still limited part of the programme,” he said.
“One of my colleagues always likes to say monetary policy is not a solo, it’s a quartet: you have the asset purchases, the accumulated stock of purchases, the re-investment policy and forward guidance.”
Late last month, the ECB laid out plans to cut its stimulus programme from the start of next year to 30 billion euros a month from 60 billion. That arrangement will run at least until September.
Reporting by Helen Reid, editing by Larry King