Exclusive: ECB Insider: QT is ‘Just the Next Step’; Need to Discuss it and ‘Better Sooner than Later’

12 September 2022

- ECB insider: I want to discuss QT as soon as possible
- ECB insider: Discussion of QT within Governing Council ‘could be’ in October

By David Barwick – FRANKFURT (Econostream) – The European Central Bank Governing Council should start without delay to discuss at least in general terms how to reduce the ECB’s balance sheet, according to yet another insider who spoke to Econostream on the subject.

As Econostream reported as early as May, ECB insiders did not rule out that quantitative tightening would make it onto the Governing Council’s agenda this year, and the latest comments - made by someone who would be involved in QT-related decisions - make clear that the pressure to broach the topic is mounting.

QT was ‘just the next step’, given that the ECB’s ‘step-by-step’ approach to normalisation has already brought about the conclusion of net asset purchases and rates lift-off, this person reasoned.

‘That’s my understanding’, he said. ‘We need to discuss it, better sooner than later. I want to discuss it as soon as possible.’

‘I would like’ October’s monetary policy meeting of the Council to be the occasion to initiate this discussion, he said, and indeed ‘it could be.’

‘I think it’s needed’, he added. ‘We need to discuss things before we take decisions. So, in order to take decisions, we need discussion as soon as possible. We should have a plan.’

A plan did not necessarily mean a precise road map, but rather ‘a common understanding about how we approach this’, he said, also given that QT was ‘another very difficult problem.’