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

MNI (London)
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
[TOPICS: M$X$$$,MC$$$$,M$$EC$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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