Weidmann Says Time for ECB to Exit ‘Very Expansionary’ Policy
(Bloomberg) -- The European Central Bank’s expansive monetary-policy stance is out of touch with the euro area’s economic upturn, making it all the more important for the institution to begin changing course, according to Governing Council member Jens Weidmann.
Weidmann, who is also the president of Germany’s Bundesbank, argued in Berlin on Thursday that with inflation heading toward the ECB’s goal, it’s “time to begin exiting the very expansionary monetary policy and the non-standard measures, especially considering their possible side effects.”
The central bank’s intention to end bond purchases in December is “just a first step toward a necessary normalization of monetary policy in the euro area” and other policy tools will probably change “only gradually over the next few years,” Weidmann said at a briefing with reporters.
“The economic upturn contrasts with the monetary policy stance remaining exceptionally expansionary,” he added.
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The ECB has said that it plans to keep interest rates at their current levels at least through next summer, and aims for inflation of just under 2 percent over the medium term.
Weidmann, who has frequently been critical of extraordinary stimulus, has been widely seen as a frontrunner to become ECB president when Mario Draghi’s term ends in October 2019.
However, Chancellor Angela Merkel has not publicly stated her support for his candidacy and a German newspaper this week reported that the country’s political leadership is prioritizing other European positions as avenues for Germany to influence regional policies.
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