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- ECB's Weidmann: We should not ignore the risk of too high inflation
ECB's Weidmann: We should not ignore the risk of too high inflation
ECB Governing Council Member and Bundesbank President Jens Weidmann said in a speech on Friday that the bank should not ignore the risk of too high inflation, and must remain watchful, according to Reuters. Monetary policy should not commit to its current very expansionary stance for too long, he added, before continuing that if required to safeguard price stability, monetary policy as a whole will have to be normalised.
Weidmann said that elevated inflation rates will probably take longer than previously projected to recede and that the pandemic could have a marked impact on inflation setting. That could mean that inflation won't fall back below the ECB's 2.0% symmetric target in the medium-term, he added.
Market Reaction
Weidmann is a well-known ECB hawk, and thus the euro has not reacted to his comments. Weidmann is set to leave his post as Bundesbank head at the end of the year.
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