Weidmann questions ECB bond-buying on programme's first day
ZURICH (Reuters) - Bundesbank chief Jens Weidmann took aim at the European Central Bank's new bond-buying plan on Monday, saying it blurred the lines between monetary and fiscal policy and risked delays to budget consolidation efforts.
The ECB began its programme of printing money to buy sovereign bonds - so-called quantitative easing (QE) - on Monday with a view to lifting euro zone inflation from below zero and back towards its target of just under 2 percent.
But Weidmann, who sits on the ECB's policymaking Governing Council, questioned whether the weak price pressures in the 19-country euro zone justified the central bank deploying a more expansive monetary policy.
"Is that really a reason to become more expansive now? I am sceptical," he said in the text of a speech for delivery in Zurich.
"The risk painted by some people of a self-reinforcing spiral of falling wages and prices, or deflation, is very low," he added. "This view is shared by the vast majority of the ECB Governing Council."
Weidmann noted that the ECB's plan to buy sovereign bonds on the secondary market was not banned by the central bank's rules.
"But nonetheless, with the purchases, the Eurosystem (of euro zone central banks) will become the biggest creditor of the states, so that the bundling of monetary and fiscal policy significantly increases," he said.
Of the bond-buying plan, he added: "That can, of course, lead to bad habits and to countries putting off the necessary consolidation of public budgets."
(Reporting by Edward Taylor; Writing by Paul Carrel; editing by John O'Donnell)
