ECB’s Weidmann Warns Inflation May Pick Up Faster Than Expected

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European Central Bank Governing Council member Jens Weidmann warned that inflation in the euro area could pick up faster than expected, and urged not to drag out the institution’s pandemic bond-buying program.

Weidmann, who is also the president of Germany’s Bundesbank, will “urge to also keep a close eye on the risk of an inflation rate that is too high and not just look at the risk of an inflation rate that is too low,” he told German newspaper Welt am Sonntag in an interview published on Sunday. “Higher inflation rates cannot be ruled out.”

The ECB expects inflation to average 1.9% in 2021, mainly reflecting temporary factors, before falling to 1.5% and 1.4% in 2022 and 2023. While underlying price pressures should strengthen as the economy recovers, the current outlook foresees inflation well below the ECB’s goal of 2%.

Weidmann also said the ECB’s emergency asset purchase program, known as PEPP, must end when the Covid-19 crisis is over.

“The first P stands for pandemic and not for permanent. It’s a question of credibility,” said Weidmann. The program is set to run through March.

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