ECB's Weidmann: Expansionary monetary policy still appropriate

Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, said on Wednesday that risks are clearly skewed towards higher inflation, as reported by Reuters.

Additional takeaways

"Temporary factors causing inflation spike could lead to higher wages, inflation expectations."

"Pandemic Emergency Purchase Program (PEPP) should be reduced step by step, should not end abruptly."

"Expansionary monetary policy still appropriate but PEPP must end when the emergency is over."

"ECB should not lock in very loose monetary policy for too long."

"PEPP's flexibility should be reserved for exceptional circumstances."

Market reaction

The EUR/USD pair showed no immediate reaction to these comments and was last seen posting small daily gains at 1.1816.