Rationale for asset purchases now gone, ECB's Knot says

The stronger euro reflects the relative strength and stability of the single currency bloc's economy, a top European Central bank official said.

Speaking at an event in Brussels, the ECB's Klaas Knot said that implied a reduced need for continuing asset purchases and in favour of a gradual - yet decisive - shift from non-standard policy instruments and towards traditional ones, Reuters reported.

With the threat of deflation having mostly disappeared, the main rationale for central bank asset purchases was now gone, Knot added.

In a separate sources-based report, on 19 September, Reuters said six sources had told it there was a heightened chance the ECB would at least keep the door open to extending its bond buying programme again, even after a widely-expected announcement to do so in October.

Strength in the euro, in particular, was said to be driving a rift among policymakers at the ECB tower.

As well, due to that rift the full details of the ECB's plans might not be announced until December.

The expected decision from the BoE to raise rates was a factor which argued in favor of tighter policy, the report said, even as several policymakers emphasised the uncertainty around the White House's ability to deliver on promised reforms.

"Recalibration is not tapering, it's open ended," one of those sources told Reuters.

Rabobank's ECB-watcher, Elwin de Groot, believed that second Reuters report supported his call that Frankfurt would opt in October for a flexible "decision by meeting" approach - meaning that, if needed, asset purchases could be ramped-up again.

However, some of the details regarding tapering would not be announced until December, de Groot explained.

His 'base' case was that the ECB would implement a €20bn reduction to QE in January, followed by two similar reductions in March and June alongside the release of the monetary authority's most recent set of update macroeconomic projections.