European Central Bank policymakers, fending off a German court challenge to their money-printing scheme, insist that bond buys help prop up the economy and their benefits outweigh the side effects, minutes of their June 4 meeting showed on Thursday.
FILE PHOTO: The headquarter of the European Central Bank is photographed during sunset, as the spread of the coronavirus disease continues in Frankfurt, Germany, April 28, 2020. REUTERS/Kai Pfaffenbach
“There was broad agreement among members that while different weights might be attached to the benefits and side effects of asset purchases, the negative side effects had so far been clearly outweighed by the positive effects of asset purchases on the economy in the pursuit of price stability,” the ECB said in its minutes of the meeting seen by Reuters.
Still, ECB policymakers acknowledged the risks and side effects of low rates, including the drain on savings and drag on bank earnings. They also noted that high government debt could pressure the ECB to keep rates low since higher borrowing costs could quickly raise debt sustainability concerns.
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