FRANKFURT, Germany (AP) – European Central Bank head Mario Draghi is likely to tread softly on Thursday as the bank inches toward bringing an end to its monetary stimulus efforts.
Analysts think it’s a near-certainty that the ECB, the monetary authority for the European Union’s 19-country euro currency union, will start scaling back its 60 billion euros ($69 billion) in monthly bond purchases after their earliest termination date at the end of the year.
But they don’t expect Draghi to provide the road map for the exit at Thursday’s news conference, which will follow the regular meeting of the bank’s 25-member governing council at the bank’s Frankfurt skyscraper headquarters. The bank is expected to leave its interest benchmark unchanged at zero. More clarity on the timing of the stimulus withdrawal is expected at the Sept. 7 meeting.
The reason why little is expected right now: Draghi and top bank officials want to avoid a sudden market reaction that could prematurely send business and government borrowing costs higher before the phase-out starts.
The caution may be understandable given the reaction to Draghi’s speech on June 27 in Sintra, Portugal, where he talked about the “strengthening and broadening” eurozone recovery but signaled no definite shift in the bank’s stance.