25 Views

ECB should have signaled end to asset buys: Weidmann

© Reuters. Deutsche Bundesbank (German Federal Bank) President Weidmann attends the ‘G20 Africa Partnership – Investing in a Common Future’ Summit in Berlin© Reuters. Deutsche Bundesbank (German Federal Bank) President Weidmann attends the ‘G20 Africa Partnership – Investing in a Common Future’ Summit in Berlin

PARIS (Reuters) – The European Central Bank should have signaled a clear intent to end asset-buying, Bundesbank President Jens Weidmann said on Friday, a day after the bank extended the purchases and left the door open to another extension.

Growth is improving and much of the stimulus is provided through the ECB’s bloated balance sheet, so the relevance of ongoing asset purchases is diminishing, Weidmann, a long-time critic of the ECB’s quantitative easing program said in Paris.

Although the ECB decided on Thursday to halve its asset buys, it extended the scheme by nine month, retaining an option to both extend and increase the purchases, against the opposition of policy hawks in the bloc’s core countries.

“In my view a clear end of net purchases would have been warranted, especially because I, as you probably know, have taken a particularly critical view on government bond purchases in the euro zone,” he said.

Weidmann, touted as a potential candidate to succeed ECB President Mario Draghi in two years, argued that easy monetary policy is still needed given weak inflation, so the debate is about the extent of the stimulus and the instruments the ECB should use.

“The main impact of our purchase program is not so much in the monthly buys, but in the total volume of bonds already on our books,” Weidmann added.

Indeed, the ECB has purchased over 2 trillion euros worth of bonds and Draghi acknowledged on Thursday that this is an increasingly vital component of policy support.

Weidmann added that an end of asset buys is also warranted as the gap between the economy’s output and potential is rapidly closing. “According to our forecasts, the output gap will close next year, and in the short term, the economy could grow even faster than previously expected,” he said.

sponsoredArticle = ‘div-gpt-ad-1466339494851-0’;

You may be interested

Princeton graduates’ crypto-currency wins backing of big U.S. investors
Cryptocurrency News
64 views
Cryptocurrency News
64 views

Princeton graduates’ crypto-currency wins backing of big U.S. investors

editor - October 27, 2017

© Reuters. Princeton graduates' crypto-currency wins backing of big U.S. investors By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) - U.S. investors…

No end in sight for tech giant share gains
Technology News
61 views
Technology News
61 views

No end in sight for tech giant share gains

editor - October 27, 2017

© Reuters. Amazon logo is pictured in Mexico City By Sweta Singh and Nivedita Bhattacharjee (Reuters) - How much bigger…

Exxon Mobil Q3 Earnings Beat Analyst Expectations
Stock Market News
57 views
Stock Market News
57 views

Exxon Mobil Q3 Earnings Beat Analyst Expectations

editor - October 27, 2017

© Reuters. Exxon Mobil Q3 earnings beat analyst expectations. Investing.com - Exxon (NYSE:XOM) Mobil’s financial results came in higher than…