MNI: ECB Mersch: APP Efficiency Diminishes the Longer it Runs

By Christian Vits

     FRANKFURT (MNI) - European Central Bank Executive Board member Yves Mersch

Wednesday warned that there are risks if the bank's asset purchase program

remains in place for too long.

     "While a too rapid end to the purchase program could lead to excessive

market reactions we must not neglect that the program loses its effectiveness

and increases the associated risks all the more the longer it runs," Mersch said

in a speech in Frankfurt.

     He also expressed confidence that the apparent decoupling between growth

and inflation won't persist and inflation will, therefore, pick up.

     "That means we can reduce net purchases of assets and at the same time

maintain a sufficient loose monetary policy to uphold the current inflation

dynamics," Mersch added.

     If one extrapolates the actual economic recovery "it is hard to imagine

that we will have to increase the volumes of our buys once again," he stressed.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

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