Replies to post #311119 on Option Millionaires

[uranium-pinto-beans]

The European Central Bank may shrink its massive securities portfolio by simply allowing bonds to mature, a top ECB official said Monday.
"There is a normal way of letting the balance sheet go down when we stop the purchases," ECB Vice President Vítor Constâncio told European lawmakers at a hearing in Brussels . "Just letting [the bonds] reach maturity and...being repaid will lead to a reduction."
Constâncio's comments came after Federal Reserve officials suggested that the U.S. central bank would start shrinking its own $4.5 trillion balance sheet in 2017.
Both central banks have loaded up on government bonds and other assets in recent years to stimulate their economies, expanding their balance sheet to post-World War II record highs. The ECB's balance sheet has swollen to EUR4.1 trillion ( $4.3 trillion ), or around 40% of the eurozone's gross domestic product.
Investors are watching closely for signals as to how the Fed may unwind its balance sheet. Minutes of the central bank's March policy meeting, published last week, showed officials plan to start shedding assets in 2017, but offered no details as to how far or how fast the central bank would move.
Selling securities, rather than allowing them to mature, would decrease prices and increase yields, Mr. Constâncio warned. He said the advisability of that would depend on the ECB's other policy decisions.
For now, the ECB appears some way from any move. Instead, Mr. Constâncio said the central bank was ready to accelerate the pace of its bond purchases, currently running at EUR60 billion a month, to cushion the economy from any shocks.
Mr. Constâncio said the eurozone economy was probably picking up speed, but remained dependent on stimulus from Frankfurt .
He said underlying inflation--excluding volatile energy and food prices--remained disappointing. In particular, wages aren't yet rising fast enough, he said.
Policy makers in Frankfurt have been watching anxiously for signs of fatter wage deals across the currency bloc, which could help drive inflation toward the ECB's target of just below 2%. Except for a brief spike in February, eurozone inflation has languished far below that level for years.
In its annual report, published Monday, the ECB said the drag from wages was expected to dissipate gradually as the effects of the financial crisis fade.
Mr. Constâncio said wages would need to grow at an annual rate of 2.4% for inflation to reach 1.7% in 2019, in line with the ECB's current forecasts.
In consequence, "It is appropriate to preserve the degree of monetary [stimulus] we are currently providing," he said.