Bundesbank chief stands up to finance minister

German central bank chief Jens Weidmann defended his criticism of the European Central Bank's latest anti-crisis strategy after a tongue-lashing from Finance Minister Wolfgang Schäuble.

Bundesbank chief stands up to finance minister
Photo: DPA

Central bankers have a duty to speak out, Weidmann said Tuesday, adding that openness and transparency were important pre-requisites for confidence in a currency and its central bank.

Weidmann,who as Bundesbank chief sits on the ECB’s policy-setting governing council, told a bank colloquium it was “important for confidence that central bankers, who administer a public good, also publicly justify themselves.”

He had come under fire over the weekend for being openly critical of the ECB’s schemes to buy up the sovereign bonds of debt-wracked countries in order to help bring down their borrowing costs.

On Sunday Schäuble told the Frankfurter Allgemeine Zeitung (FAZ) newspaper that public critiques from Weidmann could hurt confidence in the ECB.

“People are very much confused and the central banks are fundamentally the institutions which should reassure the citizens,” he said.

Weidmann voted against a revamped bond purchase scheme known as OMT or Outright Monetary Transactions unveiled earlier this month by European Central Bank head Mario Draghi.

Schäuble was opposed to publicly admitting there was a conflict in the ECB governing council, according to the FAZ.

“I don’t see any conflict between Draghi and Weidmann,” he said during a Frankfurt conference the first week of September.

Weidmann has maintained that the ECB is overstepping its mandate and that its bond buying scheme is tantamount to monetary financing or simply switching on the printing press to print the banknotes to pay for a country’s debts.

The Local /sh

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Inflation rose in Germany in December: report

Inflation in Europe's largest economy Germany clambered higher in December, official data showed Friday, but remained short of the European Central Bank's target for the 19-nation eurozone.

Inflation rose in Germany in December: report
Prices in Germany are rising, but not as fast as they should be. Photo: Jens Büttner / zb / dpa
Price growth hit 1.5 percent year-on-year last month, statistics authority Destatis said, some 0.4 percentage points higher than in November.
And it reached the same level when measured using the Harmonised Index of Consumer Prices (HICP) yardstick preferred by the ECB.
But while German price growth was headed in the right direction, it was still well short of the ECB's just-below-two-percent goal. Over the full year 2019, inflation averaged just 1.4 percent.
“There is little sign of sustained growing price pressure that could prompt the ECB to rethink its ultra-expansive monetary policy,” said economist Uwe Burkert of LBBW bank.
Here's a graph put together by the German newswire DPA, showing how the inflation rate in Germany has fluctuated between 2008 and 2019. 
The ECB has set interest rates at historic lows, granted hundreds of billions of euros in cheap loans to banks, and bought more than 2.6 trillion euros ($2.9 trillion) of bonds in efforts to keep credit flowing to the economy, stoking growth and inflation.
But it has fallen short of its eurozone-wide price growth target for years, predicting last month it would inch up to just 1.6 percent by 2022.
Economists have pointed to both uncertainty over political events, like trade wars and Brexit, and long-term developments like ageing populations as possible reasons for sluggish growth and inflation.
Under new chief Christine Lagarde, the ECB plans to launch a wide-ranging “strategic review” this year, its first since 2003, that could adjust its tools or even reexamine the inflation target itself.
In the meantime, she has urged countries — like Germany — with sound government finances to lift spending in hopes of juicing the economy.