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The European Central Bank should quickly end asset buys next year as the outlook does not warrant the extension of its 2.3 trillion euro scheme, Bundesbank President Jens Weidmann said, weighing in on the biggest issue facing the ECB this autumn.
Speaking to German newspaper Boersen-Zeitung on Wednesday, Weidmann called for a quick and orderly end to the asset buys, arguing that inflation will continue to gradually rise and ECB policy would still remain expansionary for years.
Considered a leading hawk, Weidmann has always opposed the asset buys and his unambiguous comments lay down the Bundesbank's position just as the ECB prepares to debate whether to extend the asset purchases or start winding them down next year.
"Based on our June forecast, there is no need in my view for taking further action for next year and in particular not for extending the buying programme," Weidmann told Boersen-Zeitung in an interview.
Speaking earlier in the day, ECB President Mario Draghi avoided any discussion of currency policy but noted that any policy change should be done with care as policymakers do not fully understand how unconventional policies or the new economic realities may work.
The ECB has already bought over 2 trillion euros worth of bonds, depressing borrowing costs and successfully igniting growth, which is now on its best run since the global financial crisis.
But inflation is still below its target of close to but below 2 per cent, likely staying there at least through 2019, raising concerns that inflation may be behaving differently than before the global financial crisis.
Weidmann said he was also opposed to making technical changes to the programme, arguing they would lead to negative consequences.
The comment is significant as the ECB is expected to hit many of its self-imposed purchase limits next year, including on buying no more than one-third of country's outstanding bonds, and without changes to its rules, the asset buys would have to be phased out.