(Bloomberg) — Battle lines are being drawn at the heart of the European Central Bank over whether to add monetary support soon to head off any economic slowdown, or wait for stronger evidence that it’s needed.
Executive Board member Fabio Panetta raised the prospect of a preemptive burst of stimulus last week when he said “the risks of a policy overreaction are much smaller than the risks of policy being too slow or too shy.”
That echoes Chief Economist Philip Lane, who has suggested more must be done to revive inflation even if the worst of the economic crisis has passed. He said on Twitter last week that “ample” stimulus is still required.
Yet their colleague Yves Mersch, who steps down in December, said in a Bloomberg interview that the downside risks have lessened and he sees no deterioration