2017.11.1609:14:00UTC+00Mersch Warns Markets Against Expecting ECB To Boost Bond Buys After QE End

Markets should not expect the European Central Bank to increase its asset purchases once the ongoing program ends and the bank will adopt a gradual approach to policy normalization, the bank's Executive Board member Yves Mersch said Thursday.

"I do not expect that the market would be right to anticipate a further increase of asset purchases at the end of our program," Mersch said in an interview to the broadcaster CNBC.

Late October, the ECB said the size of its monthly asset purchases will be halved to EUR 30 billion at the start of next year, but they will continue for nine months.

The path of monetary tightening still need some amplitude of monetary accommodation, Mersch said.

The bank opted the "lower for longer" style of tapering for a second time this year and many hope this would be the beginning of the end of ultra-easy monetary policy since the 2007-08 global financial crisis.

That said, the bank has stressed that the economic recovery is still dependent on the monetary stimulus as inflation is yet to return to its target of "below, but close to 2 percent".

"We said that the improved situation is not warranting the same amount of purchases," Mersch said.

"But it would nevertheless also be a certain element of presence in the market that would still be warranted, and that's why we also extended the horizon of our purchases."

The policymaker said that the ECB stands ready to reach to any additional negative shocks.

Mersch also said that the ECB Staff may revise up the Eurozone growth projections in December. Regarding inflation, he said the downfall may be less pronounced.