Draghi’s QE Era Seen Ending

Mario Draghi is ready to end the European Central Bank’s bond-buying program even if he puts off the decision for one more policy meeting, economists say in a Bloomberg survey.

Almost a third of respondents predicted the ECB president will set an end-date for purchases after next week’s gathering of the governing council, and 46% said he’ll do so at the July session.

Either way, analysts are confident buying will be phased out this year, especially after executive board member Peter Praet confirmed a Bloomberg News report by signaling policymakers will hold their first full talks on whether to pull the plug on the stimulus tool.

“It could well be the case we are going to have a formal announcement in June rather than in July, as I had expected before Praet’s speech,” said Annamaria Grimaldi, an economist at Intesa Sanpaolo. “If they want to be on the extra-cautious side they could wait until July 26. However, Praet is the last of a number of members who hinted that market expectations that the asset-purchase program will be terminated this year are realistic.”

A decision to terminate the bond-buying program would mark the first step for Draghi out of crisis-fighting mode. The June 14 meeting in Latvia—one of the occasional sessions held outside Frankfurt—comes four years to the month since the ECB became the first major central bank to cut interest rates below zero. It followed up with cheap loans to lenders and asset purchases that will total €2.6 trillion ($3.06 trillion) by September.

Economists predicted it will add €38 billion of debt to quantitative easing in the last three months of 2018, and reinvest the proceeds from maturing bonds for another two to three years.

The ECB is still years behind the US Federal Reserve in removing emergency stimulus. The US central bank slowly started lifting borrowing costs in 2015 and is on course for at least two more interest-rate increases this year.

While Praet reiterated his confidence in the eurozone’s economic expansion and signs that inflation is gaining traction, policy makers will have to take into account a host of risks. Economists cited the top two concerns as political uncertainty in Italy and a global trade conflict.