Weidmann Says ECB Should Have Set Clear End Date for Bond Buying

  • Bundesbank head speaks in Paris after QE extended for 9 months
  • Price pressures in line with inflation reaching ECB goal

The European Central Bank should have decided on an end date for its asset-purchase program rather than retaining the option to extend it after September 2018, Bundesbank President Jens Weidmann said.

“From my point of view, a clear end of net purchases would have been appropriate,” Weidmann said in a speech at the German embassy in Paris on Friday. “The development of domestic price pressures shown in projections is in line with a trajectory that will take us toward our definition of price stability.”

Weidmann’s critique comes one day after the Governing Council extended quantitative easing until September at a monthly pace of 30 billion euros ($35 billion), leaving the door open for further buying after that if needed. The Bundesbank president was among a handful of policy makers who didn’t support the decision, according to Germany’s Boersen-Zeitung.

In his speech, Weidmann stressed that, given the low level of inflation, an “expansionary” monetary policy is still justified in the euro area and that “a little more time” will be needed to bring price gains back to the ECB’s goal of just below two percent. He also said that labor-market reforms in euro-area countries have been effective in raising employment, and that the region’s economy will be running at full capacity sometime next year.

Speaking earlier on Friday in Paris, Bank of France Governor Francois Villeroy de Galhau said this week’s ECB decision on asset purchases is “an essential step toward their possible end later, a step justified by our confidence in gradual convergence of inflation” with our target.

Bond purchases could finish before the end of 2018: Among scenarios presented to the ECB’s Governing Council this week was one that foresaw buying tapered over three months after September to close out the year, people familiar with the matter said.

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