What Economists Think about ECB Asset Purchases

On Thursday, the European Central Bank announced that it would continue as planned with its asset-purchase program, through which the bank has been purchasing debt issues in the open market since 2015. The bank reduced its purchases from €80 billion per month to €60 billion per month starting in April.

The program was part of the bank’s efforts to avoid deflation, and the ECB has indicated that it will run at least through December of this year, or “until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2 percent over the medium term.”

In February, eurozone inflation hit 2 percent for the first time since 2013, which some may credit to the central bank’s buying. But did the program actually stave off deflation? Chicago Booth’s Initiative on Global Markets put that question to the members of its European Economic Experts Panel, 51 percent of whom agreed that it has.

“(It's) hard to see how monetary expansion, in whatever form, would do nothing for activity or inflation,” remarked Olivier Blanchard of the Peterson Institute.

In contrast, the panel was relatively uncertain about whether adding to the program in response to a European economic downturn would boost economic growth in the eurozone.