Bundesbank chief Weidmann (2019): Against prolonged continuation of low interest rates
RALPH ORLOWSKI / REUTERS
The European Central Bank (ECB) wants to stick to its extremely loose monetary policy for a long time - this was made clear by the central bank chief Christine Lagarde after the interest rate meeting of the Governing Council.
But not all members of the committee wanted to go along with it.
Bundesbank President Jens Weidmann has voted against the resolutions on the monetary policy outlook.
For him, "the potentially too long extrapolation of the low interest rate environment is too extensive," he said in an interview with the "Frankfurter Allgemeine Zeitung".
Basically, there is agreement in the ECB Council that an expansionary monetary policy is appropriate at the moment, said Weidmann.
His council colleague Pierre Wunsch, who heads Belgium's central bank, had also rejected the outlook.
From his point of view, too, the ECB has decided too much in advance.
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The adjustment of the interest rate outlook became necessary after the monetary authorities set a new inflation target two weeks ago as part of their strategy check.
The ECB is now aiming for two percent inflation in the medium term.
So far, the goal had been just under two percent.
Among other things, the central bankers now want to keep their key interest rates at the current level or an even lower level until it can be seen that inflation has reached two percent and then remains that way for the time being.
In the interview, Weidmann also commented on the development of the inflation rate.
He expects inflation to rise sharply in the near future.
"My experts expect rates for Germany around the end of 2021 that could go in the direction of five percent," he said.
But mainly temporary effects are at work.
In the longer term, however, you have to "keep a close eye on" the various factors.
For the entire euro area, the ECB has so far assumed an inflation rate of 1.9 percent for this year.
She also expects prices to continue to rise over the next few months.
For the next year, however, it has so far expected a weaker rate of 1.5 percent, followed by 1.4 percent in 2023.
fdi / Reuters