The monetary policy of the European Central Bank will remain easy even after it is likely to stop its bond purchase program next month, and only after that can it begin to normalize its policies if necessary, said Francois Villeroy de Galhau, one of the directors of the ECB.The regulator should complete its bond purchase program with a budget of 2.6 trillion euros next month, paving the way for a possible increase in interest rates in the middle of next year, which will be the first in the last eight years. Collapsing this program is part of a long road to monetary policy normalization."Net purchases are likely to end in December. However, the completion of our asset purchase program does not mean the end of our monetary incentives, we are still far from this," Villeroy said, adding that after asset purchases cease, it is very important to adapt the pace of policy normalization depending on new economic data.For these purposes, the ECB has three tools: reinvesting its assets, interest rates, and bank refinancing operations. Regarding consistency, Villeroy said that he would prefer to slow the pace of reinvestment only after the first interest rate increase. The ECB could also revise liquidity and loans to banks if the need arises, although not necessarily under the same conditions that were possible in the past.
