ECB's Knot calls for ending stimulus and declaring victory

LONDON (Reuters) - The European Central Bank should wind down its stimulus program after September as it has reached its inflation goal, ECB policymaker Klaas Knot, a staunch critic of the scheme, said on Wednesday.

He was openly contradicting the ECB's official view, expressed by its President Mario Draghi, that it was too early to declare victory as the euro zone still needed cheap credit if inflation was to return to its target of almost 2 percent.

The ECB has extended its 2.55 trillion euro bond-buying program until September, albeit at a reduced pace, and retained an option to extend it further if needed.

But Knot, the Dutch central bank governor, argued the threat of a fall in prices had been averted and the case for a continuation of the asset-purchase program (APP) had gone.

"With deflation risk clearly off the radar, the main rationale for employing the APP has therefore ceased to exist," he said. "Fear of relapse owing to an allegedly premature discontinuation of net purchases seems rather overdone."

He called for "a full phasing out" of the purchases "from September onwards" and said the notion of extending it for "fine-tuning" inflation, currently at 1.4 percent, was "at least debatable".

(Reporting By David Milliken; Writing by Francesco Canepa; Editing by Peter Graff)

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