Volker Wieland expects expansionary monetary policy to continue for a long time following new ECB strategy (Börsen-Zeitung, FAZ, NZZ, dpa,Reuters)

Prof. Volker Wieland sees the new strategy of the European Central Bank (ECB) essentially as a sharpening of the previous strategy. At the same time, he sees the new orientation as evidence of a continued expansionary monetary policy, as he explained in a statement to various media.

As a result of the strategy review, the ECB will in future aim for a medium-term inflation target of two percent instead of "below, but close to, two percent," as was previously the case, said ECB President Christine Lagarde. This inflation target is symmetrical, and deviations to the downside are just as undesirable as deviations to the upside. According to Wieland, it is good that the inflation target "has not been raised massively to three or four percent, as some have suggested. That would have been a mistake, in my view.""The emphasis on flexibility and the willingness to tolerate a temporary, moderate overshooting of the target practically means that the ECB will continue to keep its policy very expansionary for a very long time, i.e. it will continue to buy securities for a long time and maintain negative central bank interest rates," he said in an interview with the "Passauer Neue Presse."The Governing Council confirmed the Harmonized Index of Consumer Prices (HICP) as the yardstick for this. In the future, owner-occupied housing is also to be taken into account. Here, Wieland would have liked the Governing Council to look at even broader measures of inflation, such as the GDP deflator.Overall, the new strategy is mainly a sharpening of the previous strategy with a strong focus on the environment with very low interest rates, according to Wieland's assessment. "In doing so, the ECB emphasizes that primarily factors outside its control cause the low level of real interest rates, i.e., nominal interest rates minus inflation expectations, i.e., weak trend growth, low productivity and demographic factors."Climate protection is expected to play a major role in the future. On this point, Wieland was skeptical in an interview with the FAZ: "There is no empirical evidence that corporate bond purchases by the ECB could influence the financing conditions for different investment projects in a way that would slow down climate change."What Wieland misses in the new strategy is an analysis of whether loose monetary policy played a role in building up financial stability risks before the financial crisis, as the news agency Reuters points out. 

dpa/Süddeutsche Zeitung: "Europas Währungshüter werden flexibler beim Thema Inflation"
Reuters: "EZB überarbeitet Strategie - mehr Spielraum für die Inflation"
Börsen-Zeitung: "EZB schafft sich mehr Spielraum bei Inflation" (€)
FAZ: "Eine grüne Strategie für Europas Notenbank" (€)
Handelsblatt: "'Zwei Prozent ist keine Obergrenze': Das ist die neue Strategie von EZB-Chefin Lagarde" (€)
NZZ: "Die EZB strebt neu ein symmetrisches Zwei-Prozent-Inflationsziel an"
Passauer Neue Presse: "Wirtschaftsweiser Wieland rechnet mit keiner Zinswende" (€)