German Central Banker Warns About Lower for Longer Rates

HAWKISH Bundesbank boss Jens Weidmann weighed in on the Eurozone’s monetary policy this weekend, arguing that interest rates are too low for Germany .

Speaking at an open day at the country’s central bank, Weidmann said that the European Central Bank (ECB) rate policy is “too loose for Germany “, and warned again against keeping rates too low for an extended period of time.

“If we pursued our own monetary policy, which we don’t, it would look different,” he said, adding that the ECB must make policy which suits the currency union as a whole.

The intervention comes after ECB president Mario Draghi’s speech in London last week, in which the monetary policy chief argued strongly in favour of sticking to the existing fiscal rules.

Draghi’s comments were seen as an attack on Italian Prime Minister Matteo Renzi , who has advocated a more flexible budget system in which countries’ structural reform programmes are taken into account when deficit reduction targets are put in place.

Weidmann also expressed concern to domestic media outlets that low interest rates could make governments delay fiscal consolidation and structural reform. The German policymaker has previously warned against a quantitative easing programme for the Eurozone.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza