An ECB Board Member Says QE 'Has To Be Big' To Work

Benoit Coeure, who sits on the six-member executive board of the European Central Bank, just stoked expectations for the eurozone's likely looming quantitative easing (QE) programme even higher.

When asked about what a QE programme might look like in an interview for the Irish Times, Coeure said: "The only thing I can say is that for it to be efficient it would have to be big."

Coeure went on:

So we have to make the case in a convincing way that we have the resolve and the instrument to move the European economy out of the low growth, low inflation situation before it becomes a trap... And then all institutions have to contribute according to their mandate. The ECB has a mandate which has to do with inflation. We certainly have to act and show in a convincing way that we have instruments to act to deliver on our mandate.

One of the things investors and analysts have stressed in recent weeks is that there's a risk that even if the ECB does agree to QE, a hashed-together compromise will make it too small and ineffective.

Here's Jonathan Loynes at Capital Economics expressing that worry:

Overall, then, while the ECB is belatedly set to cross the Rubicon to full-blown quantitative easing, it will have to be uncharacteristically bold if it is to meet or surpass expectations and have a material impact on the euro-zone's economic outlook. We are not particularly hopeful.

The ECB has been the most sluggish of the major central banks in its stimulus efforts, and most people are expecting a similar disappointment on 22 January, the ECB's next meeting. But maybe Coeure's comments mean something big really is coming.