(Bloomberg) -- Bundesbank President Joachim Nagel said that future purchases of government bonds by the European Central Bank should be reserved for special cases.
“The extensive bond purchases contributed to price stability in an era of low inflation, but they were also associated with numerous side effects in financial markets,” he said on Tuesday.
The ECB embarked on large-scale asset purchases in 2015 in a bid to revive inflation that had become too slow. It later launched a separate program during the Covid-19 pandemic. Holdings peaked at about €5 trillion ($5.6 trillion), mostly consisting of government debt.
Speaking in Frankfurt, Nagel highlighted the ECB’s ongoing strategy evaluation and stressed that “this will provide an opportunity to critically review the quantitative easing policies we have seen in the past.”
“Without prejudging the outcome of the review, I think their use should be limited to exceptional circumstances,” he said.
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