FRANKFURT AM MAIN: European Central Bank chief Mario Draghi on Thursday played down suggestions the institution might soon wind down its massive economic stimulus, saying policymakers must be "persistent and patient" faced with low inflation.
"We need to be persistent, and patient," Draghi said, as "really there isn't any convincing sign of pickup" in inflation.
Observers are eyeing the bank closely for signs it may soon end its monthly bond purchases of 60 billion euros ($69 billion) per month.
Along with low interest rates and cheap loans to banks, the measure is designed to encourage growth in the 19-nation eurozone, pushing inflation towards its target of just below 2.0 percent.
Just three monetary policy meetings remain before December, when the "quantitative easing" (QE) purchases are presently set to expire.
Most ECB watchers expect the central bank to soon announce a path out of bond-buying that will see it "taper" or wind down the scheme step-by-step next year.
While inflation is still sluggish, economic growth in the 19-nation eurozone has picked up strongly enough to dispel the fears of deflation that had prompted policymakers to launch QE.
And the ECB could soon reach technical limits to its bond buying that will make the already controversial programme even more difficult to continue much beyond the end of the year.
- Playing it safe -
Nevertheless, Draghi refused to be drawn on when exactly a decision might fall.
The governing council -- made up of six ECB board members and the governors of each eurozone country's central bank -- was "unanimous in setting no precise date for when to discuss changes," he said.
"We simply said that our discussions should take place in the fall, or in autumn, since we are in Europe," he added.
"The ECB played it safe today," commented analyst Holger Schmieding of Berenberg bank, although Draghi "sounded slightly more confident."
Policymakers are keen to avoid spooking markets with talk of withdrawing their stimulus measures.
Draghi offered a glowing picture of the eurozone recovery and hinted at adjusting policy at a central banking conference in Sintra, Portugal, in late June.
Coming soon after another gesture towards "tapering" at that month's monetary policy meeting in Tallinn, the comments prompted the euro to strengthen against the dollar and government bond yields to rise.
If those trends continued, they could sap growth in the single currency area and undermine the slow progress towards the inflation target.
So the ECB hastily sought to clarify Draghi's words and limit market reactions, following up with Thursday's soothing tone.
"Overdone market reaction to Draghi's thoughtful but neutral Sintra speech has probably made the ECB even more cautious" than previously, Schmieding said.
For now, the data back up policymakers in refusing to set a date for an end to QE.
- 'Enjoy the summer' -
Any observers looking for interest rates to rise from their historic lows likely have an even longer wait ahead than for the end of QE, analysts agree.
Banks complain that low rates are eating into their profits, while inflation outpacing interest effectively shrinks savers' nest eggs in real terms.
But the ECB has for many months stated that rates will only start to rise "well after the horizon of net asset purchases" has come to an end -- a message Draghi repeated Thursday.
The bank president denied governors had even discussed "tapering" bond purchases or that they had tasked committees with studying how a wind-down might work.
That makes any concrete announcement on ending stimulus much less likely at September's meeting.
"The ECB will likely continue to tiptoe towards the exit," Berenberg's Schmieding said -- all but ruling out a rate hike before late next year.
"ECB watchers, pack your stuff and enjoy the summer," ING Diba bank analyst Carsten Brzeski commented via Twitter on the long wait ahead.
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