ECB must halt bond-buying, says Dutch bank governor

[THE HAGUE] The European Central Bank must halt its bond-buying programme because it has done as much as it can to help power economic growth, the Dutch central bank governor has said.

"It must be stopped as soon as possible, because the bond-buying programme, if we look at it realistically, has done all that we could expect of it," Klaas Knot told a Dutch TV news show "Buitenhof" which was rebroadcast Monday.

Last week, the ECB left interest rates at historic lows and held fast to plans to buy 30 billion euros (S$48.7 billion) of government and corporate bonds per month until September, offering no hints about when it might step back from the mammoth stimulus programme.

The bank's governors, led by President Mario Draghi, agreed at the talks in Frankfurt that they would even be prepared to increase or lengthen the programme, known as qualitative easing (QE).

"There is no reason to continue with this programme," insisted Mr Knot.

"We have committed ourselves until September of this year. But after that, we should phase it out as quickly as possible. And that is what the market is also expecting." "I think we should be clear in what we say, and I think there is enough evidence" to halt it, he added.

Mr Draghi announced in January 2015 that the ECB would expand its interventions in financial markets with mass bond-buying.

Ending the programme would be a major policy shift that could herald the beginning of the end of the cheap money era.

And charting a way out of QE has been made more complicated by the recent strength of the euro, which has gained more than 15 per cent against the dollar over the past year, currently hovering around above US$1.23.

AFP