Bundesbank president Weidmann to resign five years early from post

Longstanding critic of ECB’s easy-credit policy warns about inflationary risks in farwell message

German Bundesbank president Jens Weidmann. Photograph: Michele Tantussi/AFP

German Bundesbank president Jens Weidmann. Photograph: Michele Tantussi/AFP

 

Bundesbank president Jens Weidmann, a relentless critic of the European Central Bank’s ultra-easy monetary policy, will step down from his post on December 31st, more than five years before his term was due to end, the German central bank said on Wednesday.

Weidmann, among the most conservative members of the ECB’s policymaking Governing Council, said he was resigning for personal reasons. But his farewell message still warned about inflationary risks.

“I have come to the conclusion that more than 10 years is a good measure of time to turn over a new leaf – for the Bundesbank, but also for me personally,” Weidmann told staff at the bank.

After taking charge at the Bundesbank in May 2011 as the euro zone’s debt crisis raged, Weidmann was often in opposition at the ECB, voting against major policy moves pushed through by ECB Presidents Mario Draghi and Christine Lagarde.

‘Prospective inflationary dangers’

In July, he was among a handful of policymakers that opposed the ECB’s pledge to keep interest rates at record lows until inflation stabilises at 2 per cent and on Wednesday he warned the ECB not to lose sight of the risk that prices might rise too fast.

“It will be crucial not to look one-sidedly at deflationary risks, but not to lose sight of prospective inflationary dangers either,” Weidmann said as he bade farewell.

The ECB has battled with sluggish price growth for a decade but inflation has risen sharply in recent months and came in at 3.4 per cent in September, data showed on Wednesday.

“I respect Jens Weidmann`s decision to step down from his position as president of Deutsche Bundesbank at the end of this year after more than 10 years of service, but I also immensely regret it,” Lagarde said in a statement.

The 53-year-old has become less confrontational since Lagarde took over.

Although Weidmann’s successor will be picked by the new German government, ECB-watchers said potential Bundesbank chiefs include Claudia Buch, currently Weidmann’s deputy, economists Volker Wieland, Marcel Fratzscher, Lars Feld, Lars-Hendrik Roller, and current Bundesbank chief economist Jens Ulbrich.

Isabel Schnabel, currently an ECB board member, is also a potential successor, although she would need to quit her current role, which some argue is a higher profile job. – Reuters