Bundesbank Chief Backs Some Easing Policies

The European Central Bank is unanimous that accommodative monetary policy is appropriate for the currency bloc, one of the bank’s more hawkish members said in a speech Thursday.

Speaking at an event marking the 60th anniversary of the Bundesbank, Jens Weidmann said that while expansive monetary policy is appropriate, how this is applied can spark disagreements. He repeated his opposition to the purchases of government bonds. “I would have rather forsaken the use of this instrument,” he said.



Mr. Weidmann’s speech dwelt to a considerable extent on the history of his institution and on broad themes with little discussion about current monetary policy.

The comments come as the ECB ponders when to begin to unwind its very generous monetary policy. The ECB is currently buying €60 billion of bonds per month. It is due to continue doing this until the end of the year and markets are closely eyeing central bankers’ remarks for clues about what the central bank will do beyond the end of the year.

On Tuesday, ECB President Mario Draghi gave a speech, which markets interpreted as a slow turn toward tapering, or a gradual reduction of purchases. Most economists expect the central bank to reduce purchases gradually next year. The euro gained in value and bond prices fell on the back of Mr. Draghi’s comments. However on the following day, the ECB’s Vice President Vitor Constancio said in an interview with CNBC that Mr. Draghi’s speech wasn’t any different than two other recent major policy comments he had given.

via MarketWatch

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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