Volker Wieland and members of Council of Economic Experts ask ECB to start tapering

The German Council of Economic Experts has asked the European Central Bank (ECB) to start tapering, ending the bond-buying program as soon as possible.

During the presentation of the economic forecast at the House of Finance in Frankfurt, the council was convinced that the economic upswing in Germany would go on. In 2017, the council now expects GDP to grow by 1.7 percent, in 2018 by 1.8 percent.

According to the council, the current monetary policy shows many risks for financial stability. “The ECB should start announcing the end of the bond purchases until summer  and end the bond-buying program until the end of the year”, Prof. Volker Wieland said. In his opinion, inflation development and growth rates had already indicated in November that the monetary policy stance was no longer adequate. This development had even become clearer now. “The macroeconomic assessment makes it necessary to tighten monetary policy”, he said. However, according to Wieland, it was wrong to start with raising interest rates. In any case, this would slow down economic development. “The bond-buying program sends out the wrong signals and therefore should be ended rather sooner than later”.

According to the majority of the council members, the current criticism from the United States regarding the current account surplus is not justified and do not indicate macroeconomic imbalances. There had been a permanent deficit in the United States since 1983, Wieland said. Only the partners had changed. “During the 1980s there were discussions about that with Japan, then China and now Germany”, Wieland added.