FRANKFURT, Sept 15 (Reuters) – Borrowing costs, not the volume of asset purchases, are the best indicator of the European Central Bank’s policy stance, ECB chief economist Philip Lane said on Wednesday, pushing back at suggestions that his bank was tightening its policy.
The ECB last week decided to reduce bond buys moderately as the economy was improving, facing some criticism that it is cutting support even as inflation is expected to undershoot its target for years to come.
“It’s not a good idea to identify the monetary policy stance with the volume of asset purchases because the mappings from the volume of asset purchase to the monetary policy stance essentially goes through the yield curve… and we assess that the yield curve remains pretty low,” Lane told a seminar.
He added that he was happy with progress in lifting underlying inflation. (Reporting by Balazs Koranyi; Editing by Hugh Lawson)
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