The ECB will announce a big reduction Thursday in its support to the eurozone economy, analysts predict, as it takes its first steps to wean the single currency area off the medicine that dragged it out of crisis.
With healthy growth and sinking unemployment, central bankers are confident the single currency area can stand more fully on its own two feet in future -- but face a continuing puzzle over why inflation has failed to rise towards their target.
The European Central Bank would therefore start to reduce the volume of easy money it pumps into the economy, analysts said, while at the same time pledging to keep the monetary tap open for a longer period of time in order to help the markets adjust.
The ECB had in 2015 begun buying massive amounts of bonds to fight the threat of deflation -- a damaging downward spiral of prices and activity.
Since then, the state of the eurozone economy has improved.
In the first half of the year, economic growth powered to 2.4 percent in annualised terms, outdoing even optimistic forecasts, while unemployment has fallen to an eight-year low of 9.1 percent.
ECB policymakers say historic low interest rates, cheap loans to banks and pumping 60 billion euros per month ($70.4 billion) into bond markets have made it easier for businesses and households to borrow sorely-needed money for spending, investment or hiring.
"Monetary policy measures introduced by the ECB since June 2014 have played a pivotal role in supporting the economy," the bank's chief economist Peter Praet said earlier this month.
But inflation remains below the ECB's target of just below 2.0 percent -- believed to be most favourable for economic growth -- and is forecast to continue falling short.
"Because inflation is rising only gradually, the ECB can afford to go slowly towards the exit" from bond-buying, Berenberg economist Florian Hense said.
- Battle in the boardroom -
Some on the ECB's governing council remain loath to withdraw their powerful medicine, fearing they might nip the recovery in the bud by tightening access to money -- a fate that the US Federal Reserve suffered in 2013.
Meanwhile, other governors have long warned of the risks of easy money, arguing they have softened the market discipline that usually restrains households, businesses and states from borrowing too much.
That could lead to credit-fuelled price bubbles in some sectors, with some observers pointing to rising property markets in popular eurozone cities.
Ahead of the meeting on Thursday, "ECB communication has been remarkably consistent in signalling a 'slower for longer' QE extension into 2018," said Pictet Wealth Management economist Frederik Ducrozet.
QE or quantitative easing is the technical name for the bond-buying programme.
By lowering the amount it spends on bonds each month, but extending the duration, the bank can keep supporting the economy -- even as it acknowledges healthier growth and makes a concession to fears it has gone too far.
A Bloomberg News survey of economists published Monday found a majority expect the ECB to extend its purchases until September but halve the pace, to 30 billion euros per month.
By then, it will have bought some 2.5 trillion euros of government and corporate bonds.
Meanwhile, it has vowed not to raise interest rates until "well after" the end of bond-buying.
Prolonging the scheme suggests that a hike remains far off, keeping money cheap.
Another key concern for central bankers is the euro/dollar exchange rate, which spiked to $1.20 over summer as talk of winding down purchases grew. But it has fallen back recently.
A more expensive euro could brake eurozone inflation and economic activity, placing the price growth target even further out of reach.
"The ECB will stress that policy remains accommodative" to allay markets' fears, Berenberg analyst Hense said.
© 2017 AFP