Jens Weidmann did not approve the decisions of the Governing Council. The President of the Bundesbank worries about credibility. And expects the inflation rate to rise sharply.
Bundesbank President Jens Weidmann voted against the monetary policy decisions of the Governing Council on Thursday.
For him, “the potentially too long continuation of the low interest rate environment is too extensive,” he told the “Frankfurter Allgemeine Zeitung” in an interview published on Friday. However, there was consensus in the Governing Council that “an expansive monetary policy is currently appropriate”.
The central bank is now aiming for an annual inflation rate of two percent in the medium term for the 19 countries in the euro area – and over a longer period of time if possible. In doing so, it also accepts that inflation is temporarily moderately above the target value. Previously, the ECB’s inflation target was “below but close to two percent”.
Before Weidmann, the Belgian central bank chief Pierre Wunsch had already said that the central bank’s new interest rate promise was going too far for him. It worries about credibility, he told CNBC television. “I don’t know whether it will be appropriate to have negative interest rates in three, four, five or seven years.”
Weidmann, meanwhile, is initially expecting a sharp rise in the inflation rate. “My experts expect rates for Germany around the end of 2021 that could go in the direction of five percent.” Here, however, mainly temporary effects are at work. In the longer term, however, you have to keep a close eye on the various factors.
Weidmann emphasized that he sees the ECB’s new inflation target of two percent, which was set in the new central bank strategy, “neither a shift towards significantly higher inflation rates nor a dramatic change of course”.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
