ECB: Bundesbank boss Jens Weidmann votes against ECB proposals

ECB: Bundesbank boss Jens Weidmann votes against ECB proposals

The European Central Bank (ECB) wants to prolong its extremely lax monetary policy – ​​this is what the head of the central bank did Christine Lagarde apparently after the Governing Council interest rate meeting. But not all members of the committee wanted to go along with it. Bundesbank President Jens Weidmann has voted against the proposals on the monetary policy approach. For him, “the potentially very long extrapolation of a low interest rate environment is too broad,” he said in an interview with “Frankfurter Allgemeine Zeitung”.

In principle, the ECB Council is in agreement that a broad monetary policy is appropriate at this time, Weidmann said. The head of Belgium’s central bank, his council colleague Pierre Wunsch, also rejected the approach. From his point of view too, the ECB is much more committed to it than ever before.

An adjustment of the interest rate outlook became necessary two weeks ago by monetary officials as part of their strategy investigation. set a new inflation target Was. The ECB is now targeting 2 per cent inflation in the medium term. Till now the target was just less than two per cent. Central bankers now want, among other things, to keep their key interest rates at the current level or even lower, until it can be seen that inflation reaches two per cent and then stays the same for some time. Has been made.

In the interview, Weidman also commented on the evolution of the inflation rate. They expect inflation to rise sharply in the near future. “My experts expect rates for Germany to go in the direction of five percent by the end of 2021,” he said. But mainly temporary effects are working. In the long term, though, you’ll have to keep a “close eye” on a variety of factors.

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For the entire euro area, the ECB has so far assumed an inflation rate of 1.9 percent for this year. She also expects the prices to continue to rise over the next few months. However, for the next year, it is expecting a weakening rate of 1.5 per cent so far, followed by 1.4 per cent in 2023.

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