European Central Bank board member Peter Praet said he sees no alternative to pursuing the bank’s current stimulus program even though it hasn’t yet succeeded in bolstering the euro area’s low inflation.
“There is no plan B, there is only one plan,” Mr. Praet, the ECB’s top economist, said in an interview with Belgian weekly magazine Knack published on Wednesday.
Consumer prices in the eurozone rose 0.2% in December from the same month a year earlier, the European Union’s statistics agency said on Tuesday, far below the ECB’s inflation target of just below 2%.
“If you print enough money, you will always get inflation. Always,” Mr. Praet said. “But if oil and commodities prices tumble, it is more difficult to allow inflation to rise.”
The ECB stepped up its efforts to bolster the region’s weak economy at a policy meeting last month but markets were disappointed by the measures it announced, which included expanding its bond-purchase program and cutting an already negative deposit rate to encourage lending.
ECB President Mario Draghi said a program under which ?60 billion of mostly government bonds are purchased each month would be extended by six months, through March 2017, and could be extended further if necessary.
Mr. Praet confirmed that time frame. “Looking at the current economic situation, I think that the present policy will continue until at least 2017 and for longer if necessary,” he said.
He also defended the ECB’s efforts to rejuvenate the euro area’s flagging economy. “If the ECB had not taken the measures that it did, we would be in a depression; I’m convinced of that,” he said. “The euro area might have fallen apart and that would have been a catastrophe. The ECB therefore did what it had to do, but monetary policy cannot resolve all problems.”