Finance
ECB's Nagel says bond-buying is only for exceptional cases
Published by Global Banking & Finance Review®
Posted on June 23, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 23, 2025
2 min readLast updated: January 23, 2026
ECB's Nagel suggests bond buying only in rare cases due to past losses, signaling a shift in monetary policy.
FRANKFURT (Reuters) -The European Central Bank should only engage in massive bond buying in "absolutely exceptional cases" after this form of monetary stimulus caused it to report major losses, ECB policymaker Joachim Nagel said on Monday.
The Bundesbank's president was joining a growing number of policymakers in signalling the ECB wanted to turn the page on the aggressive-money printing policy that marked the last decade, when inflation in the euro zone was too low.
"In light of the latest experience, we should deploy the instrument of large-scale asset purchases at the lower bound for interest rates in absolutely exceptionally cases in the future," Nagel said in a speech.
Having vanquished high inflation, the ECB is reviewing its long-term strategy, including the role of massive bond purchases, or quantitative easing (QE). An announcement is expected in coming weeks.
The ECB bought 5 trillion euros ($5.77 trillion) worth of debt in 2014-21, a wave of money printing that has been criticised for creating bubbles in property and financial markets.
When inflation and interest rates eventually rose, the ECB and its shareholding central banks, particularly the Bundesbank, ended up paying high interest on the reserves they had created while collecting little income from the bonds.
ECB vice-president Luis de Guindos told Reuters earlier this month the central bank had "learned much more" about the side effects of its stimulus policies. Croatia's central bank governor Boris Vujcic said "the bar for QE would be higher" in the future.
ECB President Christine Lagarde said in the European Parliament on Monday the central bank "certainly prefer(red) to use interest rates" over QE as its policy tool.
($1 = 0.8673 euros)
(Reporting By Francesco Canepa; Editing by Toby Chopra)
Nagel stated that the ECB should only engage in large-scale bond purchases in 'absolutely exceptional cases' due to the significant losses incurred from previous policies.
The ECB is reviewing its long-term strategy, particularly the role of massive bond purchases or quantitative easing, following the successful control of high inflation.
The ECB bought 5 trillion euros (approximately $5.77 trillion) worth of debt during the period from 2014 to 2021, which has been criticized for creating financial market bubbles.
ECB President Christine Lagarde indicated a preference for using interest rates over quantitative easing as the central bank's primary policy tool.
The ECB has learned much about the side effects of its stimulus policies, as noted by ECB vice-president Luis de Guindos, highlighting the need for a more cautious approach in the future.
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