European Central Bank (ECB) President Mario Draghi has reaffirmed the bank’s commitment to fully execute its massive quantitative easing (QE) program, dampening talk of an early wind-down of the stimulus.
“After almost 7 years of a debilitating sequence of crises, firms and households are very hesitant to take on economic risk,” Draghi said in a speech Thursday in Washington.
“For this reason quite some time is needed before we can declare success, and our monetary policy stimulus will stay in place as long as needed for its objective to be fully achieved on a truly sustained basis,” he said during an International Monetary Fund forum.
The ECB had announced earlier that its QE, launched in March at a pace of 60 billion euros a month, will last at least through September 2016.
Draghi played down concerns that the QE, which involves large-scale money printing, could fuel price bubbles in property or sap savings, Reuters reported.
“At the moment there is little indication that generalized financial imbalances are emerging,” the ECB chief was quoted as saying.
Still, policymakers must be very careful when the time comes to close the tap on easy money policies, he said.
This is because extended periods of money printing can lead investors to sink cash into assets that in more normal times can be more difficult to easily sell.
“Exiting from abundant liquidity policies has to be done very, very carefully,” Draghi said.
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