Minutes Show ECB Policymakers Agreed On Need To Counter Criticism

European Central Bank policymakers agreed that there was a need to reaffirm that its measures can achieve the aim of returning inflation to its near-2 percent target, amid rising criticism against its stimulus measures, minutes of the April 20-21 rate-setting session showed Thursday.

"There was general agreement that there was a need to counter the perception that monetary policy could no longer contribute to a return of inflation to the Governing Council's aim of below, but close to, 2 percent," the minutes, which the ECB calls "account" said.

The central bank left all three of its key interest rates unchanged in the April session after reducing them unexpectedly in March.

Policymakers also agreed that the ECB's monetary policy measures were being effective and that there were grounds for cautious optimism about the economy. However, patience was needed for the measures to fully unfold over time in terms of output and inflation, the minutes said.

The rate-setters also stressed that the Governing Council was unanimous in its commitment to deliver on its mandate and on the appropriateness of an expansionary monetary policy stance.

"In the light of recent public criticism that had appeared to link the ECB's decisions to developments in the political sphere in a Member State, it was viewed as important to reaffirm collectively the independence of the ECB in the pursuit of its mandate," the minutes said.

Eurozone was undergoing a moderate economic recovery, though the risks remain tilted to the downside, members agreed. Meanwhile, policymakers expressed some concern over the Eurocoin indicator that registered its biggest fall in over three years during March. The measure is often cited as a useful cyclical indicator of growth in the euro area, the minutes said.

Citing the current oil futures prices, the ECB rate-setters expect headline inflation to return to negative territory in the next few months. Thereafter, inflation is forecast to rise in the latter part of the year as a result of the upward impact of base effects together with assumed increases in oil prices, as embedded in the futures curve.

"In 2017-18 inflation was expected to pick up further, in line with the projected economic recovery and supported by the ECB's monetary policy measures," the minutes said.

Policymakers were worried that market-based inflation expectations had not picked up from their low levels despite the stabilization in oil prices.

"While euro area inflation was expected to pick up, it was crucial to ensure that the very low inflation environment did not become entrenched via second-round effects on wage and price setting," the minutes said.

ECB rate-setters expressed regret that the very detailed, country-specific recommendations for structural reforms given by the EU were not being sufficiently followed up and implemented by member states. They urged countries to strive for a more growth-friendly composition of fiscal policies.