FRANKFURT The euro zone economy started the year on a solid footing and the European Central Bank should start plotting an exit from stimulus if the recent inflation rise proves lasting, ECB policymaker Jens Weidmann said on Thursday.Warning against keeping monetary policy too easy for too long, Weidmann, the influential head of Germany's Bundesbank, said the ECB was at risk of becoming a prisoner of markets or fiscal policy. "I will argue that the economic outlook at the beginning of the year is quite positive and the inflation rate is gradually approaching to the ECB’s definition of price stability," Weidmann, one of the ECB's top hawks, said.
"If this price development is sustainable, the prerequisite for the withdrawal from the loose monetary policy is created," he added.Still, he argued that an expansive monetary policy was currently appropriate.
Facing the threat of deflation, the ECB has cut rates deep into negative territory, bought over 1.5 trillion euros of bonds and regularly offers banks free loans, all in the hope of reviving growth and eventually prices.
(Reporting by Balazs Koranyi and Andreas Framke Editing by Jeremy Gaunt)
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Updated Date: Jan 27, 2017 01:15 AM