With inflation above 8 percent and forecasts of more than 4 percent next year, the real interest rate in the money market remains deeply negative, he said. "Monetary policy remains very expansionary, supporting aggregate demand." Whether the ECB will manage to raise the central bank rate quickly this year, as it should, remains to be seen, he said. Bank customers should not expect higher interest rates for investments in checking accounts. "Interest rates on medium- and longer-term loans, however, have risen briskly, not least on government bonds."
According to Wieland, the new bond-buying program TPI is not necessary. "This would first require a comprehensive analysis showing that the transmission of an interest rate increase up to the inflation rate varies widely across countries and that this hinders the transmission to the inflation rate in the euro area as a whole." In fact, the ECB seems to want to take the work away from the European Stability Mechanism (ESM), which was created by member states during the financial crisis to fund bailouts, Wieland said.
In his view, it would be much better for states to access the ESM's financing facilities if necessary. "These loans come with conditionalities that ensure sovereigns pursue sustainable fiscal policies and implement reforms that increase the performance of the economy." With the so-called OMT (Outright Monetary Transactions), the ECB already has a program with which it can intervene in the bond markets in a supportive manner if an ESM program is available, he said.