The ECB’s go-slow approach to the establishment of a QE program is both rational and laudable.
The QE experiments in the U.S. and Japan are far from over. While “low” inflation is cited as a reason to keep the money creation experiment alive, the definition of inflation that is used is highly questionable. If the definition of “inflation” is rising prices, then, in the U.S., we have plenty of it in asset and home prices, and even in the U.S.’s service sector. Just because the prices of “goods”, which dominate the inflation calculations, are not rising, doesn’t mean that there isn’t inflation.
In addition, no one really knows the total impact of the QE program – and it may be years before we do. Since ’09, the Fed in the U.S. has created over $2.5 trillion in bank reserves, most of them excess. Because of such reserves, the Fed’s toolkit is now quite limited, and the economy’s response to future monetary policy initiatives, via the Fed’s manipulation of interest rates, may be much less effective than it has been in the past.
The ECB would be wise to avoid a QE program until the total results of the experiment in the U.S. and Japan are known. That may take years.