The sources said no policy proposals had been made and the formal discussion within the ECB’s governing council would only begin next week as agreed at the July meeting.
Hawkish policymakers tend to favour a relatively rapid exit from QE, perhaps over six to nine months, with the ECB’s guidance alluding to the bank’s intent to phase out asset purchases in its policy statement.
Led by Jens Weidmann, the President of the powerful Bundesbank who has already called for a “quick and orderly” exit – they argue that no extension of what is an emergency monetary tool is warranted given rapid growth.
In the opposite camp, doves favour an extension of the 60-billion-euro-a-month scheme at a reduced but steady pace and revisiting the issue of exit only next year, once German wage negotiations wrap up.
But any meaningful extension of the 2.3 trillion euro ($2.73 trillion) scheme could run up against asset purchase limits that the ECB has itself imposed.
Without a change to the programme’s key parameters, the ECB could buy between 30 to 40 billion euros of bonds in the first half of 2018 but would be severely constrained thereafter, the sources said.
It could further relax a requirement to buy bonds in proportion to each country’s ECB shareholding, or include new asset classes such as stocks, as raised in July by one policymaker but not given consideration, or non-performing bank loans.
For legal reasons the ECB is unlikely to remove a cap that limits it to buying only a third of each country’s debt, as Draghi himself suggested in July.
To conform with a European Court of Justice ruling on a separate bond purchase scheme, the ECB may in any case favour maintaining either an end date or a commitment to phase out purchases, the sources added.