Bundesbank President Jens Weidmann has warned that European central bankers to “slave market” would if they always aroused new expectations of a still further easing of monetary policy. “The markets have to learn that not every expectation is not fulfilled every wish,” Weidmann said before the International Club Frankfurt business journalists in F rankfurt on Monday evening. Especially since the European Central Bank (ECB) President Mario Draghi at the urging of her is an explicit goal for the balance sheet expansion to one trillion euros has set market expectations for additional measures are high. Weidmann and up to six additional Governing Council members voted against this balance target. Weidmann particularly resists the swelling pressure that the ECB a mass purchase of government bonds begin to address the low inflation.
Author: Philip Plickert, born in 1979. Editor-in business, responsible for “The Economist”
The risk of deflation Weidmann holds for low. While it could be that the inflation rate of 0.3 percent decline in November because of the drop in oil prices in the coming months even below zero “. One lying for several months under zero inflation poses for me but still is not deflation” This would only be before, if it is self-reinforcing downward spiral of negative inflation rates, declines in GDP and wage cuts come to an expectation-driven. “This risk is still low,” Weidmann said.
The oil price decline he describes as a “small stimulus package.” The Bundesbank forecast for Germany next year looks far ahead only a very modest growth of 1 percent. However, cheaper oil imports could increase consum ption.
In fact, there are currently a sign of hope for the economy from the current surveys to read. Thus, the published Tuesday purchasing managers index rose for the industry in the euro zone from 50.1 to 50.8 points, mainly because the improved outlook. Values above the 50-point mark signal a growing production. The index for the services sector increased from 51.1 to 51.9 points. “Given the weaker euro and the cheaper crude sentiment indicators are likely to show up in the coming months,” commented economist at Commerzbank. A real leap upward did the ZEW Economic Sentiment for Germany: The index climbed to its highest level since May. “Slowly, the ZEW Financial Market experts seem to regain confidence in the German economy,” said Clemens Fuest, head of the Centre for European Economic Research. This hang with the weaker euro and the low oil prices together.
More about
Because the ECB had its monetary policy already greatly relaxed, he saw no need for further easing, said Weidmann. He recalled the recent actions of the ECB: one to a record low of 0.05 percent interest rate lowered, favorable long-term loans to banks and purchases of covered securities and securitization. The effect of additional easing with government bond purchases was “modest and uncertain,” Weidmann said. “Great things are not expected.”
The harder outweigh the risks and side effects: With the purchase of government bonds, the ECB would go into a dangerous “border area to fiscal policy,” warned Weidmann. In plain English, this means that the central bank pursuing public finance. “They t hus facilitating trade finance life,” Weidmann said in a critical undertone: This means that the reforming zeal of the policy is braked. Government bond purchases would take the pressure off governments to consolidate public finances and to make their economies more competitive.
In addition, Weidmann criticized that with government bond purchases “in fact a community responsibility” for the purchased debt will established and thus risks are redistributed from existing debt mountains between taxpayers in different countries. German taxpayers would then jointly liable, for example, for the purchased Italian debt. Weidmann warned that the central bank could slip into a “regime of fiscal dominance”. This means that the financing needs of the State central bankers dictated the actions, whereas they would neglect their goal of price stability.
Here you can buy the rights to this article
<- ========= confirmation page.! Will be loaded by JS if submission is successful === ============ ->
.
No comments:
Post a Comment