LONDON: The European Central Bank (ECB) will discuss boosting its regular asset purchases once the pandemic-era emergency stimulus comes to an end, but any such increase is uncertain, Governing Council member Madis Muller said.

       While the eurozone’s recovery should allow the ECB to end its €1.85 trillion (US$2.2 trillion or RM9.21 trillion) pandemic bond-buying programme in March, officials will discuss how to avoid derailing the rebound when support is pulled back. One option would be to expand the pre-crisis plan above the current €20bil (RM98.23bil) per month, Muller said in an interview in Tallinn.

       His remarks point to the potentially contentious debate that awaits policy makers, especially those who worry that a return to the pre-Covid set-up would hit heavily indebted countries not yet ready to function without extraordinary ECB support.

       “I realise that it would be a problem if there is a very sharp cliff effect at the end of the pandemic emergency purchase programme (PEPP),” the Estonian central bank chief said.

       A potential increase in the older quantitative easing or QE programme is “part of the discussion we will have on how to phase out PEPP and what it would mean for asset purchases going forward,” he said. “And of course the decision will depend on market conditions next spring and the economic outlook at that point.”

       Benchmark German bonds erased a decline shortly after the interview, with 10-year yields trading little changed around -0.32%.

       Muller’s Greek counterpart, Yannis Stournaras, this week cautioned against drawing early conclusions about ending crisis aid, saying it would be “really arrogant on our part to declare victory” already.

       Yet others have sounded optimistic about the eurozone’s prospects recently. Executive board member Isabel Schnabel said Monday that the recovery was well on track, and vice-president Luis de Guindos pointed to a strong performance in the second and third quarter.

       “Given the recovery that we’re seeing in the economy, also the outlook for inflation and most importantly the extremely favourable financing conditions that we continue to have in the eurozone, we should be able to end PEPP in March as it has been communicated and as it has been the original plan,” Muller said. “If you ask what is the most likely outcome then to me personally, this is the base case.”

       Like other Governing Council members, he also said he’s sceptical about the idea of redesigning the old programme. ― Bloomberg