European Central Bank policy makers expressed satisfaction with the start of their large-scale asset-buying programme, while saying inadequate structural reforms could still thwart long-term growth.
"Members agreed that emphasis needed to be placed on a steady course of monetary policy with a focus on the firm implementation of the Governing Council's recent monetary-policy decisions," according to a summary of the April 14-15 meeting published yesterday.
"At the same time, a strong signal needed to be sent to euro-area governments urging them to press ahead with structural reforms and to take measures to improve the business environment." Now in its third month, QE has notched up €122bn in public-sector bond purchases, and is set to run until September 2016.
Since the April policy meeting the ECB has announced a tweak to its purchase schedule, front loading buying to take a summer lull into account.
"It was underlined that the design of the programme provided sufficient flexibility for it to be adapted if circumstances were to change and should the need arise," the account showed. It noted that purchasing agency and supranational debt had proved "more challenging" than buying government debt.
ECB chief economist Peter Praet told the Governing Council, which comprises the central-bank governors or their representatives from the 19 euro-area nations plus the six ECB board members, that the bloc had gained further momentum since the beginning of the year, and that risks to the outlook had become more balanced.
"The positive economic outlook for the euro area, as embedded in the March ECB staff projections, depended on the full implementation of the programme and was still subject to a number of downside risks and uncertainties," the account showed.
Those uncertainties include whether governments will fail to act in the favourable conditions to lift investment and potential growth, according to the account.
"Members expressed that the risk of insufficient reform progress was particularly pronounced with regard to structural policies, which were hampered by resistance to change," it showed.
"In the absence of structural reforms, there were serious risks that potential growth would remain low and investment demand would not pick up as strongly as expected."
The presentation delivered by Benoit Coeure, the board member responsible for market operations, hinted at difficulties in achieving targets in all sub-sections of QE. The ECB plans to purchase €60bn a month on government debt, agency and supranational bonds, covered bonds and asset-backed securities.
For covered bonds, for example, cumulative purchases amounted to €63.6bn at the end of the first quarter, Mr Coeure said.
At the same time, "given the traditionally slow second quarter in primary-market issuance in the covered-bond market, such strong issuance and purchases might not be observed in subsequent weeks."
The ECB has decided to "moderately frontload" asset purchases in May and June, ahead of an expected low-liquidity period in the summer months, Mr Coeure said in London on May 18. The remarks sparked a plunge in the euro and a surge in bond prices when the comments were published.