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2018.06.0621:18:00UTC+00ECB’s Praet Hints Talks of Exiting QE Program in June Meeting

The European Central Bank will discuss next week whether to halt bond purchases later this 2018, the bank's top economist Peter Praet said on Wednesday, a hawkish rhetoric perceived preparing investors for another rollback in stimulus.

After stoking growth with a massive 2.55 trillion euro bond-buying programme, ECB policy makers must make a decision on the timetable of the quantitative easing scheme as the threat of deflation is long eliminated and the bloc is headed for its best growth streak in a decade.

While ECB policymakers broadly agree that the bond-buying scheme should end this year, ECB President has avoided any official debate on the topic of winding down the program, as he looks for more proof that inflation is on a sustained recovery.

However, comments from Peter Praete, a close ally of the ECB president, indicated that the central bank is encouraged by the increase in inflation, increasing the prospects that a decision may come sooner rather than later.

In his last remarks before ECB's next policy meeting, Praet said that the Governing Council will have to evaluate whether the progress so far has been enough to warrant a gradual unwinding of their bond purchases in their meeting next week.

Eurozone bond yields climbed and the euro touched a 10-day peak versus the dollar on the comments from Praet, perceived as one of the most dovish members of the Governing Council.

Several analysts perceived the comment as an indication that a decision is coming at the June 14 meeting. Others saw it as a kickstart to a debate that will likely reach its end and lead to a decision in July.

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