Jens Weidmann said there’s no need for the European Central Bank to expand monetary stimulus, and argued that sovereign-debt purchases are problematic even if slumping oil prices cause deflation.
“Such a development initially requires no monetary policy response, as long as no second round effects are to be seen,” the Bundesbank president said at an event late Monday in Frankfurt. “There’s a whole row of economic reasons that speak against government-bond purchases, even before you consider the legal question of whether they’re compatible with the ban on monetary financing.”
The acceleration of this year’s oil-price slump has sharpened the debate in the ECB over further policy measures to fend off deflation, with President Mario Draghi priming investors for more asset purchases as soon as next quarter. Weidmann, and up to five other Governing Council members, are against pre-announcing government-bond buying before the effects of existing programs can be judged.