RIGA, Latvia — The European Central Bank took a major step on Thursday toward winding down life support for the eurozone economy.
Meeting in Riga, the Latvian capital, the central bank’s Governing Council said it would slow its purchases of government and corporate bonds in September, and then end the program entirely at the end of the year. The stimulus was essentially a form of money printing known as quantitative easing that helped prevent the eurozone from collapsing under the strain of a debt crisis.
The bank said it did not expect to raise interest rates, which are at historic lows, until the fall of 2019 at the earliest.
Still, it had not been expected to lay out so clearly its road map for the months ahead. The mere fact that the topic of reducing the stimulus program was on the agenda was significant.
The shift away from a decade of extraordinarily easy money will be a delicate one — as the Federal Reserve, which raised its benchmark interest rate in the United States by a quarter of a percentage point on Wednesday, has learned to its peril.
Warning the Markets
In 2013, the Fed provoked a global sell-off of riskier investments when it announced that it would begin scaling back its quantitative easing program.
To avoid the same reaction, the European Central Bank has been moving with extreme caution, adjusting the language in its public statements to signal a gradual exit from the stimulus program.
Most recently, the bank indicated that debate about when to end the bond-buying program had officially begun within the Governing Council, the bank’s main decision-making body.
That was a shift from late April, when Mario Draghi, the central bank’s president, insisted after a meeting on monetary policy that members had not even discussed the bond-buying program.
On Thursday, it went further, setting out the timeline under which it would pare back the program.
The central bank said it would continue buying bonds at the same pace at least through September, and would then slow the process for the subsequent three months before ending it entirely.
The Ideal Time?
Analysts had been divided on whether the European Central Bank would announce a firm timetable for ending the purchases on Thursday, or if it would wait until the next monetary policy meeting, in July.
In the end, the central bankers opted to outline their road map, apparently deciding they could not wait much longer. Inflation has been rising toward the bank’s official target of 2 percent. By law, the European Central Bank’s main task is to keep inflation under control.
The first step, before raising interest rates, would be to end the bond buying.
Mr. Draghi is likely to give some flavor of the discussion when he holds a news conference in Riga after the Governing Council meeting.
Slowing Growth, Increasing Uncertainty
Though the eurozone economy is not mired in the seemingly constant crises of recent years, the timing of the European Central Bank’s move may not be ideal.
After booming in 2017, growth in the eurozone has slowed in recent months, and every day seems to bring new warnings that all is not well. On Wednesday, for example, the European Union statistics agency said industrial production in the eurozone fell 0.9 percent in April.
European businesses are confused and unsettled by President Trump’s war of words on longtime allies like Germany and Canada, and his decision to impose tariffs on steel and aluminum imports. At the same time, Italy is in the grips of populism, and Britain — not a eurozone member, but a major trading partner of the common currency area — is struggling to work out terms of its divorce with the European Union.
The uncertainty is making businesses reluctant to invest, and causing growth to slow.
“There is a psychological effect,” said Ulrich Spiesshofer, the chief executive of ABB, a company based in Zurich that supplies equipment for power grids.
“If you go to the Middle East, there is uncertainty; if you go to Asia, there is uncertainty; if you look at Europe, there is uncertainty; and then you go to Washington and there is uncertainty,” Mr. Spiesshofer said. “We have to deal with all of it.”