European Central Bank policy makers clashed over the bank??s asset-buying program less than a week after President Jean-Claude Trichet engineered a truce.Slovenia??s Marko Kranjec said yesterday the ECB is ??likely? to spend more than the ?60bn it has earmarked for covered-bond purchases and hasn??t ruled out acquiring corporate bonds and commercial paper. Hours later Germany??s Axel Weber, who had already said there??s ??no need? to buy any other assets, insisted ?60bn is the ??maximum.?
The diverging views suggest the ECB is still split over the best way to tackle Europe??s worst recession since World War II, even after Trichet said the decisions taken last week by the 22- member Governing Council were ??unanimous.? Weber has always opposed asset purchases and warned yesterday against stimulating the economy too much. Other policy makers have argued the bank may need to do more to counter the risk of deflation.
Trichet on May 7 cut the benchmark interest rate to a record-low 1 percent and said that??s not necessarily its lowest level. He also announced the ECB will buy 60 billion euros of covered bonds, securities backed by mortgages and public-sector loans which have suffered a slump in demand during the financial crisis. Details of the plan are to be unveiled next month.
