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DUBLIN, Feb 2 (Reuters) - The European Central Bank is normalising policy and whether it ends asset buys in September or winds them down gradually is not a major issue, French central bank chief Francois Villeroy de Galhau said on Friday.
Having bought over 2 trillion euros worth of bonds, the ECB is now contemplating whether to wind down the scheme known as quantitative easing after several extensions and markets are betting on their end in the fourth quarter.
The end of purchases is significant as the ECB has tied its next rate move to the end of asset buys and Villeroy's comment will likely reinforce market expectations that the first move could come around mid-2019.
"One shouldn't focus excessively on the sole instrument of monthly net asset purchases: whether we end them in September or taper them somewhat more gradually is not a deep existential question," Villeroy said in Dublin.
But Villeroy added even if bond buys end, the ECB will continue to provide stimulus through an array of instruments.
"We will rely more and more on the entire policy package, including the sizeable stock of acquired assets, the forthcoming reinvestments and the forward guidance on interest rates," Villeroy, who sits on the ECB's Governing Council, added.
He said normalisation will follow a predictable sequence with the ECB also keeping an eye on how exchange rates develop, with the recent dollar weakness considered a source of uncertainty.
"We will accordingly monitor the impact of the exchange rate evolution - which is a source of uncertainty - and be ready to reassess if necessary," Villeroy said.
Launched nearly 3 years ago, the bond buys have kept borrowing costs low, reviving growth and averting deflation. But prices have also been slow to respond and inflation is due to undershoot the ECB's target for years to come, suggesting that stimulus will have to continue, even if in more conventional form.
(Reporting by Padraic Halpin; Writing by Balazs Koranyi; Editing by Janet Lawrence)
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