ECB policy should revert to pre-crisis times: Weidmann

FRANKFURT (Reuters) – The European Central Bank should restore the monetary policy it had before it launched its aggressive stimulus measures, to save firepower for the next crisis and preserve normal market activity, ECB policymaker Jens Weidmann said on Friday.

Having, since 2015, pumped 2.6 trillion euro ($2.95 trillion) into the euro zone’s financial system in a bid to revive inflation, the ECB plans to stop adding to its bond pile in December and raise interest rates in late 2019 for the first time in eight years.

Weidmann, the Bundesbank’s president and one of the most prominent hawks on the ECB’s policymaking body, said the massive purchases of government bonds had deprived investors of valuable “safe assets” and taken away an incentive for banks to lend to each other.

“A monetary policy framework that achieves effectiveness in reaching our primary mandate and that, at the same time, leaves enough room for market activities is the most desirable,” Weidmann told a conference.

“Until it is proven that a return to the pre-crisis framework constrains effectiveness of monetary policy in a non-trivial way, I see no reason to depart from the pre-crisis framework,” he added.

($1 = 0.8823 euros)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.