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The head of Germany’s central bank has called for debt relief in connection with the European Central Bank epidemic to be “gradually reduced” and warned that rising electricity prices will continue to rise in the euro.
Jens Weidmann says there are “serious risks” to the idea of inflation and inflation which could be significantly higher than the economists expect and the government’s view of climate change.
The plan to urge the ECB to reduce the financial burden of the epidemic should end “once the crisis is over,” Weidmann said Monday.
His remarks sparked controversy with some members of the central bank’s executive committee over the future of its policies. The decision makers will meet next month but are expected to fail to announce the by-elections until their September meeting.
“Prices are not dead,” said Weidmann, one of the ECB’s most cautious regulators. He compared the price of a giant tortoise to the Galápagos tortoise, known to be less than 100 years old.
The decline of the Eurozone two up to 2% in May, the first time that the rate has exceeded what the ECB did for more than two years, although economists expect new information on Wednesday to show that it was slipped in June. When the central bank predicted that inflation would subside next year, Weidmann emphasized the need to “be vigilant”.
“In my opinion, the risks to inflation have changed,” he said, warning of the “serious risks posed by high prices in the eurozone”.
Prices will continue to rise next year if oil prices do not fall as expected by many, he added, “In addition, politicians can take other measures to protect the climate and increase electricity prices.”
Germany’s Carbon taxes helped boost European economic growth to 2.4% in May, the highest in the next two years. Weidmann said inflation could hit 4% in Germany by the end of this year, adding: “This reduces the purchasing power of families.”
“Thanks to the vaccine, the economy in the eurozone is now on the verge of collapse,” said a Bundesbank official, adding that this “affected” the ECB’s emergency procurement program (PEPP), its main problem.
The ECB expanded the PEPP process in March and has more than 700bn of the remaining $ 1.85tn remaining to use the program, which is expected to run until March 2022.
Debt buying stops the ECB from deciding that a coronavirus problem will go away. Weidmann said PEPP should end when all “clear” measures to eliminate it were boosted by “strong” economic recovery, adding that the eurozone is expected to reach its pre-epidemic quarter by the first quarter of 2022.
“In order not to end PEPP abruptly, however, net purchases can be gradually reduced,” he said.
His comments differed from those of Fabio Panetta, a member of the ECB executive committee, who said words Monday: “It looks like we can’t solve the financial crisis.” He cautioned that the “economic downturn should remain temporary”.
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