‘Most ECB chiefs don’t want more QE’ according to Yves Mersch

A majority of ECB governors last week did not want to boost quantitative easing further, Yves Mersch said, adding its move to buy new bonds as old ones mature would inject hundreds of billions of euros.

“The very large majority of the governing council is of the view that the measures are appropriate and that more is not needed to reach our goal,” Mersch told a journalists’ club dinner on Wednesday, referring to the ECB’s interest rate decision last Thursday.

Mersch’s comments also gave fresh detail about how the ECB will extend money printing, one week after markets dipped on disappointment that ECB president Mario Draghi had opted to extend rather than ramp up its quantitative easing programme.

Mersch, who sits on the six-person executive board at the core of ECB policy, said the decision to keep buying bonds would amount to an injection of €320bn if continued for two years from 2017.

He also said the total market for regional or municipal debt, where the ECB will also start buying, was worth up to €380bn.

“This is no verbal promise. We’re backing up our words with action,” he said.

But Mersch played down any prospects of further steps to soup up quantitative easing, the ECB’s money-printing scheme to buy chiefly government bonds.

Last week, Draghi said the ECB would extend money printing by six months until early 2017 and reinvest the proceeds of the programme from maturing bonds.

But many economists were disappointed that he had not been bolder.

In order to have done that, the majority of governors from across the bloc would have had to agree that more ambitious action was needed.

Many of them, sources have told Reuters, were sceptical.

“What was completely underestimated was the fact that we are a collective decision-making body,” Mersch said, referring to investors’ heightened expectations.

He also warned about a possible spillover from China’s slowdown on the global economy.

“The risks have become stronger,” he said.

Mersch said that ECB action to loosen the supply of money would help insulate the eurozone from any interest-rate hike in the US, although such a move could affect emerging markets.