Volker Wieland: Rise in inflation sends clear signal to ECB monetary policy ("Reuters", "Handelsblatt", "FAZ")

According to Prof. Volker Wieland, the rise in inflation to 2.0 percent in the euro area sends a clear signal to the monetary policy of the European Central Bank (ECB). "The ECB should react by slowing down or phasing out earlier the bond-buying program", he said in an interview with the news agency Reuters and the financial daily Handelsblatt. Otherwise, the risks would increase more and more.

In February, the core rate that is consumer prices without energy and food remained at 0.9 percent. In Wieland's opinion, this is no reason for clinging to the expansionary monetary policy. "It is not true that core inflation has to be at 2.0 percent," he said in an interview with "Frankfurter Allgemeine Zeitung". When the oil prices dropped, the core rate had only fallen marginally. However, the ECB had expanded its bond-buying program, Wieland argued.

Wieland sees the danger of the ECB waiting too long with tapering. In his opinion, this involves substantial risks. "The difficulties in adapting will increase", he said. According to Wieland, there is a risk of fiscal dominance as the Governing Council tried to prevent an increase in long-term rates with a view to highly indebted states. Meanwhile, Wieland sees interest-change risks rising in many banks.

Handelsblatt: "Inflation setzt Draghi unter Druck"
Reuters: "Inflationsschub im Euroraum befeuert Kontroverse um EZB-Kurs"
FAZ: "Inflation im Euroraum steigt auf 2,0 Prozent"