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ECB’s Weidmann Sticks to View Price Gains Show No Stimulus Need

ECB's Weidmann Sticks to View Price Gains Show No Stimulus Need

(Bloomberg) -- European Central Bank policy maker Jens Weidmann said for a second day that euro-zone price pressures are still increasing, signaling no need for additional stimulus when the Governing Council meets early next month.

While the currency bloc posted surprisingly strong growth at the start of the year, surveys of confidence and private-sector activity suggest the second quarter is weaker, and market measures of inflation expectations have plunged. ECB officials are preparing updated projections that will show if they still foresee a pickup in the second half of the year, and which will be central to their June 6 meeting to debate whether more support is needed.

Bundesbank President Weidmann spoke on the second day of the German central bank’s annual open-door event for the public. He reiterated his message from the previous day that capacity pressures are building and inflation will follow.

“The economic outlook is good” even amid recent uncertainties, he said. “We are assuming a rise in price pressures and that’s the condition for monetary policy to normalize.”

Euro-area inflation was stronger than expected in April, but the measure was probably boosted by higher prices over the Easter holidays and price growth has for years been below the ECB’s goal of just under 2%. Figures for May will be published on June 4.

Weidmann’s view matters because he’s a candidate to succeed Mario Draghi as head of the ECB in November. He has been a critic of past stimulus tools such as quantitative easing, and that sentiment is widely echoed in Germany.

He skirted questions on whether he might become ECB chief, but did say it would be wrong to exclude anyone on the basis of their nationality. European Union leaders will start talks at a dinner on Tuesday about sharing out posts including the presidencies of the ECB, European Commission and EU council of leaders.

It is unlikely any single country will win more than one senior post, meaning Weidmann’s chances hang partly on whether Chancellor Angela Merkel prefers to target a political position for her nation.

ECB’s Weidmann Sticks to View Price Gains Show No Stimulus Need

To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net

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