Weidmann Says Predictions for Mid-2019 ECB Rate Hike Realistic

(Bloomberg) -- Bundesbank President Jens Weidmann said that analysts’ expectations that European Central Bank interest rates won’t rise before the middle of next year are reasonable.

“Those expectations seem to be grosso modo in line with the current forward guidance of the ECB Governing Council, which says that interest rates will only increase well beyond the end of net asset purchases,” he said in an interview with Germany’s Frankfurter Allgemeine Zeitung published Tuesday.

Weidmann’s views on the prospects for euro-area monetary policy came on the same day that his French colleague Francois Villeroy de Galhau expressed concern about the recent appreciation of the euro. On Monday, Estonia’s Ardo Hansson argued that the ECB should adjust its policy guidance before the summer and shouldn’t have any problems ending asset purchases in one swoop after September. The ECB next meets to set policy on Jan. 25.

A frequent critic of the ECB’s quantitative-easing program, Weidmann’s latest take was less combative, though he reiterated his confidence that inflation is on track toward the central bank’s definition of price stability -- below but close to 2 percent.

“If the positive development continues, it would be logical not to make substantial purchases beyond those already decided upon,” he said. Asked if that means QE would end in 2018, he said he’d “consider that appropriate from today’s perspective. That’s what’s priced in in capital markets. But I generally don’t forecast decisions of the ECB’s Governing Council.”

To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Paul Gordon

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