MNI BRIEF: ECB QT Not A Policy Concern - Bundesbank's Nagel

Exceptionally high uncertainty around U.S. trade policy and events in the Middle East mean the ECB should be “more data-dependent than ever”, Bundesbank president Joachim Nagel said in a speech on Monday, with the interest rate outlook kept “correspondingly short-term at present.”

Nagel said the unwinding of the ECB's monetary policy purchase programmes should continue “without concern,” noting also that quantitative tightening’s overall effect will likely be weaker than that of quantitative easing, and should significantly counteract the direction of monetary policy, which continues to be driven by interest rates.

Even so, such instruments had proved loss-making to national central banks. While the primary objective of the ECB must be to ensure price stability, “in view of recent experience, we should only use the instrument of extensive securities purchases at the lower bound of interest rates in absolutely exceptional cases in the future."