ECB to chart end to easy money

FRANKFURT AM MAIN: European Central Bank governors are expected to begin weaning the eurozone off the high doses of support they prescribed in recent years, but they remain far away from reaching their elusive inflation target.

With healthy growth and sinking unemployment, central bankers are confident the single currency area can stand more fully on its own two feet in future even as they puzzle over why price growth has failed to pick up in step.

The ECB will therefore slash in half the volume of corporate and government bonds it buys each month, from 60 billion to 30 billion euros ( US$ 35.4 billion), analysts expect.

At the same time, it will likely pledge to keep the monetary tap open and interest rates at historic lows for longer in order to help financial markets adjust.

The ECB began buying massive amounts of bonds in 2015 to fight the threat of deflation – a damaging downward spiral of prices and activity.

Since then, the state of the eurozone economy has improved – even after a first reduction in purchases last April, from 80 to 60 billion per month.

In the first half of this year, eurozone economic growth powered to 2.4 per cent in annual ised terms, outdoing even optimistic forecasts, while unemployment has fallen to an eight-year low of 9.1 per cent. — AFP