According to Wieland, in the U.S. a turnaround toward a longer cycle of various cuts in interest rates "is not appropriate". Regarding the euro area, he asked the European Central Bank (ECB) to be prudent. In his opinion, the ECB has not made use of the good economic development to adjust monetary policy in a moderate way. Though inflation was still below target, monetary policy remained expansionary. Therefore, Wieland does not see any reason for further crisis measures, "which would cause considerable side effects". Since central banks' expanded balance sheets incite desires, central banks should face them with clear exit strategies.
In this context, Wieland recommends the application of interest rates rules. "If the ECB revises its strategy, it should apply such rules to the monetary union and publish them. In doing so, the ECB could link the symmetry of its policy to those rules".
Börsen-Zeitung: "Die Notenbanken dürfen nicht überreagieren" (€)