ZURICH (MaceNews) – In the face of a sharp inflation increase, Bundesbank President Jens Weidmann said he doesn’t rule out higher interest rates from the European Central Bank.
In an interview with the German newspaper Welt am Sonntag, Weidmann said that euro member states should not rely on the central bank to help finance an increase in national debt.
“The ECB doesn’t exist to secure the solvency” of national governments, and should the increase inflation become sustained over the long-term, the ECB would have to tighten monetary policy, he said.
“I don’t rule out higher inflation rates,” and urge that an eye is kept on “inflation that is too high, and not just on inflation that is too low.”
Upon its return from summer vacation, the ECB’s governing council will also consider the bond purchase programs designed to mitigate negative effects of the COVID pandemic, saying the PEPP emergency program must end when the crisis does.
“It’s a question of credibility,” Weidmann said. “The first P stands for pandemic and not for permanent.”
Moreover, the APP program is also not designed to continue in perpetuity and “we will discontinue that as soon as the price outlook allows.”
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