By Tom Fairless 

A top European Central Bank official signaled on Tuesday that the ECB should soon start to wind down its EUR2.3 trillion bond-purchase program, a much anticipated move that is expected to trigger volatility in financial markets.

"I am...optimistic that we can soon turn to the question of an exit" from easy-money policies, said Sabine Lautenschläger, who sits on the ECB's six-member executive board, at an event in Hamburg.

The ECB "must get ready for better times," Ms. Lautenschläger said.

The euro fell about four-tenths of a cent against the dollar after the comments, which were released after European markets had closed.

It is the first time that an ECB board member has indicated that the days of the bank's so-called quantitative-easing program may be numbered.

Last week, ECB President Mario Draghi said the issue of tapering, or winding down, the bank's controversial stimulus program hadn't even been discussed by officials at a policy meeting.

Joerg Kraemer, chief economist at Commerzbank in Frankfurt, said Ms. Lautenschläger's comments were justified.

"QE should end as there are too many negative side effects," Mr. Kraemer said, pointing to potential asset-price excesses and reduced pressure on southern European governments to reform their economies.

The comments come amid signs of strength in the eurozone's EUR10 trillion economy after years of weak growth, and a wave of criticism of the ECB's easy-money policies in Germany, Europe's largest economy. A recent jump in German inflation, to 1.7% in December, has rekindled political concerns over the impact of low interest rates on the nation's savers.

Ms. Lautenschläger, a former Bundesbank official who is the only German-born member of the ECB's executive board, previously has expressed skepticism about the bank's bond purchases.

She warned on Tuesday that the ECB shouldn't wait too long before starting to wind down the program.

"All preconditions for a stable rise in inflation exist," Ms. Lautenschläger said. The ECB shouldn't wait "until the last doubt about the return of inflation has been dispelled."

The ECB has launched an unprecedented series of stimulus measures in recent years in an effort to reinvigorate an economy that has flirted with deflation. By pushing interest rates below zero and buying tens of billions of government and corporate debt each month, the ECB hopes to drive down borrowing costs across the region, and spur growth and inflation.

Recently, signs have started to emerge that that is happening.

Business activity has risen close to a five-year high, according to a closely watched business survey, while unemployment is at a seven-year low.

Inflation in the 19-nation eurozone jumped to 1.1% last month, the highest level in three years, due largely to a rebound in energy prices.

But it is still short of the ECB's target of just below 2%.

Crucially, core inflation -- stripping out volatile energy and food prices -- has remained stubbornly low.

Mindful of that gap, Mr. Draghi last week pledged to continue the ECB's bond-purchase program through the end of the year. The purchases are due to slow to EUR60 billion from EUR80 billion a month in April.

Ms. Lautenschläger's words indicate she may favor an end to the bond purchases before December. If so, she would be supported by her countryman Jens Weidmann, who heads Germany's Bundesbank and has opposed the QE program from the start.

Still, a large majority of the ECB's 25 governing council members supported a half-trillion euro extension of QE only last month.

Howard Archer, an economist at IHS Markit in London, said the latest comments -- from a known inflation hawk -- may not ultimately signal a change in policy from Frankfurt.

"I suspect the ECB will stick to its current course for some time to come," possibly until after German national elections in late September, Mr. Archer said.

German politicians and economists have been lining up in recent weeks to call for an end to the ECB's QE program, which was launched nearly two years ago and has been repeatedly expanded.

Clemens Fuest, a top German economist who is president of the Ifo economic think tank, says the ECB should start to wind down the program as soon as April, if eurozone inflation hits 1.5%.

Ms. Lautenschläger warned that the risks and adverse side effects of QE were mounting the longer the program was in place.

While it is "important to stop taking the medicine as soon as possible," it shouldn't be withdrawn too early, she said.

"You shouldn't abruptly stop loose monetary policy but slowly cut the dose -- such a policy has to be reduced gradually," she said.

Any formal signal that the ECB's bond-purchase program will end is expected to trigger a major repricing of financial assets, as investors price in higher future interest rates. When then Federal Reserve Chair Ben Bernanke signaled in 2013 that the Fed's own QE program would be wound down, U.S. Treasury yields surged and the dollar rose substantially, an episode known as the Taper Tantrum.

Write to Tom Fairless at tom.fairless@wsj.com

(END) Dow Jones Newswires

January 24, 2017 16:58 ET (21:58 GMT)