25 Mar 2014
Buba's Weidmann: QE not ruled out completely
FXStreet (Łódź) - Bundesbank President Jens Weidmann suggested in an interview for MNI that negative interest rates were “uncharted territory” and that there was no certainty they would result in lower credit rates.
The Buba chief, who is also a member of the ECB Governing Council, admitted that negative rates could seem an appropriate tool to counter the strong euro, but that they needed more consideration.
“We need a discussion about their effectiveness and also about their costs and side-effects," Weidmann stressed. He added that this did not rule out a QE program completely, but that in was necessary to “ensure that the prohibition of monetary financing is respected."
Furthermore, Weidmann said that in case risks to price stability emerge, the answer should be monetary policy tightening.
The EUR/US fell on Weidmann's comments to 1.3808.
The Buba chief, who is also a member of the ECB Governing Council, admitted that negative rates could seem an appropriate tool to counter the strong euro, but that they needed more consideration.
“We need a discussion about their effectiveness and also about their costs and side-effects," Weidmann stressed. He added that this did not rule out a QE program completely, but that in was necessary to “ensure that the prohibition of monetary financing is respected."
Furthermore, Weidmann said that in case risks to price stability emerge, the answer should be monetary policy tightening.
The EUR/US fell on Weidmann's comments to 1.3808.