Three of the European Central Bank’s top policy makers reportedly led a push for changes to the bank’s pledge announced last month to keep buying bonds until inflation ticks up.
Bloomberg is reporting, citing euro-area central bank officials familiar with the matter, that ECB board member Benoit Coeure, Bundesbank President Jens Weidmann and Bank of France Governor Francois Villeroy de Galhau called for including overall monetary stimulus in the pledge – not just asset purchases.
Reflecting Germany’s growing impatience with ECB’s negative interest rates, Weidmann has been a leader in the fight to seize the moment of Europe’s surprisingly strong growth to roll back stimulus. The German central bank chief, and potential candidate to succeed Draghi as ECB president, said publicly after the ECB announced the bond-buying pledge that “a clear ending to the net sales [of bonds to the ECB] should have been indicated.”
The report Tuesday about dissention among the ranks of ECB policy makers did little to make up for the euro’s slide following the ECB announcement late last month, with the currency falling below the low seen after last month’s meeting.
The disagreement underscores the difficulties the bank will face reconciling differences over the course of the next year, as doves led by President Draghi persist in defying traditional expectations of tightening policy during times of economic growth. The reluctance to roll back stimulus will continue to test German patience as captured in a lengthy diatribe against Draghi published in Die Welt this week, which slammed Draghi and Co. for breaking the “unwritten law” of raising interest rates during times of growth.
“Draghi could thus be remembered as the first ECB President in history who has never raised interest rates during his tenure,” Die Welt lamented.