Bundesbank President Jens Weidmann urged policy makers at the European Central Bank to be patient and await the full impact of recently-announced policy measures, warning that the risk of those policies increased over time.
“I’d like to stress one thing: Our definition of price stability requires that the inflation rate target is achieved in the medium term,” Mr. Weidmann said on Monday at a conference in Frankfurt.
“That gives us enough time to wait for the effects of the agreed monetary policy measures on price developments.”
The ECB aims to keep inflation just below 2% over the medium term, but it has missed that target for the past three years. Policy makers have responded with a range of unorthodox measures aimed at driving inflation back toward target, including negative interest rates and a massive bond-purchase program.
While Mr. Weidmann conceded that expansionary central-bank policy is currently appropriate given the weak outlook for inflation, he warned that the ECB had little experience with its unconventional policy measures, including bond purchases, and that “the risks and side effects of ultraloose monetary policy increase over time.”