ECB said to be considering €500 billion QE plan

European Central Bank staff presented policy makers with models for buying as much as €500 billion of investment-grade assets, according to a person who attended a meeting of the Governing Council.

Various quantitative-easing options were shown to governors on January 7 in Frankfurt, including buying only AAA-rated debt or bonds rated at least BBB-, the euro-area central bank official said.

Governors took no decision on the design or implementation of any package after the presentation, according to the person and another official who attended the meeting. The people asked not to be identified because the deliberations were private.

A €500 billion purchase program would take the ECB halfway toward its goal of boosting its balance sheet to avert a deflationary spiral in the euro area. The institution is also buying asset-backed securities and covered bonds, and government bond-buying would be part of fresh stimulus to be considered at the Governing Council’s Jan. 22 meeting.

An ECB spokesman declined to comment on policy makers’ proceedings.

"The best package is an open-ended package, a clear statement of intent to keep buying until bold objectives have been met," said Richard Barwell, an economist at Royal Bank of Scotland Group Plc. "If they have to compromise to reach a consensus then its best that those compromises don't constraint the ultimate size of purchases."

Bloomberg