The president of the German Federal Bank, Bundesbank, says that strong growth across the EU is cause for the European Central Bank (ECB) to finally end its “very loose monetary policy”, according to Securities Lending Times. Bundesbank president Jens Weidmann argues that the ECB’s public sector purchase program should be used only as an emergency instrument, to avert deflation for instance. Weidmann continued that the longer these “ultra-loose” policies are in place the more intended benefits are diminished and negative side effects are increased, posing a risk to financial stability. Despite Weidmann’s warnings, Deutsche Bank analyst Jochen Möbert said that the governing council will likely not signal a tapering of the bond purchases during an upcoming meeting, adding “[a]t best, it formulates more specific conditions under which a reduction in bond purchases could occur.
German Bundesbank President Jens Weidmann. Photo: Reuters/Kai Pfaffenbach
Bundesbank president urges ECB bond buying review
He warns ECB’s “ulta-loose monetary policy” poses risks to financial stability