Weidmann calls for central bank restraint

THE EUROPEAN Central Bank (ECB) should move back toward traditional monetary policy and away from its current path which is too close to fiscal policy, ECB governing council member Jens Weidmann said yesterday.

Weidmann also said that France, where he was speaking, must meet budget deficit targets it has signed up for, and that it is especially important for it to show an example to smaller euro countries.

“Central banks must focus on price stability, must remain independent, and must not become too closely intertwined with fiscal policy,” he said in the text of a speech to be given at HEC business school.

He warned that the expectations of central banks saving the day had become so large in the Eurozone that it was time to worry about inflation eroding buying power.