FRANKFURT (Reuters) - Investors should not expect the European Central Bank to increase its bond purchases, ECB director Yves Mersch said on Thursday, adding such unconventional stimulus tools will be gradually phased out with the rise of inflation.
The ECB last month agreed to halve asset buys from January given solid growth but maintained an option to raise them back again if the outlook for inflation worsened.
"Seeing it from today, I do not expect that the market would be right to anticipate a further increase in our asset purchases at the end of our programme," Mersch, a member of the ECB's Executive Board told CNBC.
"As the situation improves, there will be a gradual normalisation out of unconventional monetary policy instruments...but this gradual path is not there to disrupt the market," Mersch added.
Inflation has missed the ECB's target of close to 2 percent for nearly 5 years and will actually decline in the coming months before a slow and gradual rebound.
Still, Mersch and fellow Governing Council member Bostjan Jazbec both signalled confidence in the ECB's projection, which see inflation rising steadily from an early 2018 dip.
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"Inflation rates are moving in line with the expectations and projections of the European Central Bank," Jazbec, Slovenia's central bank governor told Reuters.
Growth on the other hand could be faster than expected and the rise in oil prices could temper the coming inflation fall, which is mostly technical in nature, primarily to high year-earlier figures getting knocked from figures.
"No-one would be overly surprised if we would again slightly revise upwards our projections for growth," Mersch said.
He added that an inflation drop projected for the end of this year and the beginning of next year would be "less pronounced" as earlier feared.
(Reporting by Balazs Koranyi; Additional reporting by Marja Novak; Editing by Francesco Canepa)