The ECB’s chief economist says there are ‘no taboos’ as Europe loads the QE bazooka again

After European Central Bank President Mario Draghi’s indisputably dovish signals about a bigger or broader quantitative easing programme last week, we just got another hint from the very top of the central bank.

Peter Praet, the ECB chief economist, has given an interview to AFP, in which he says that the central bank has “no taboos” in terms of its unconventional asset purchases.

The bloc is no longer in recession, but core inflation (which strips out volatile items like energy and food) is only around half of what it should be, and growth is modest at best.

The ECB QE programme only began in January, six years after the US and UK central banks began theirs. It’s known as being much more institutionally conservative, but it’s rapidly catching up in terms of what it’s willing to do.

Here’s a snippet from the interview:

“The governing council has given a very strong message: it is ready to draw the consequences of its assessment of the monetary policy stance,” Praet said.

“The president has asked the teams to re-examine the toolbox and to have an in-depth 360-degrees reflection.”

“We will assess this in December, notably in light of the new macroeconomic staff projections.”

Several members of the ECB’s board expressed scepticism about the QE programme before it began, but it seems like Draghi has either won them over or won the internal argument — either way, there hasn’t been a word out of place from figures like Bundesbank chief Jens Weidmann for quite some time.

Praet also indicated that the ECB is about to revise down its inflation forecasts in December too. Consumer prices had been expected to rise by 1.7% in 2017, but that’s now looking too optimistic.

The last time Praet used the phrase “no taboo” was November 2014, just two months before the ECB surprised global markets with a bigger-than-expected QE programme. Now, it looks very much like he’s warming up the handle on the bazooka again.

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