Should the ECB abandon its bond buying programme?

Author: Olly Jackson | Published: 6 Feb 2018

The European Central Bank’s (ECB) three-year old asset buying programme could come to an end this September over concerns surrounding housing and equity bubbles. Some market participants argue it could easily use alternative tools to manage price levels in the EU.

The quantitative easing programme, launched in early 2015 after a drawn-out battle within the ECB and criticism from Germany, aims to reduce deflationary pressure and boost growth. But inflation remains well below the official two percent target, in spite of the eurozone growing by 2.5% in 2017.

The ECB scaled back the programme at the start of January, and will now purchase €30 billion (approximately $37.2 billion) a month as opposed to €60 billion. But concerns about overinflated prices in some markets have caused some market participants to call for the ECB to fully withdraw.

France’s central bank governor Francois Villeroy de Galhau said last week that...