Bundesbank Warns Draghi: "Monetary Policy... Is Too Loose"

Tyler Durden's picture

With EURUSD hardly budging, constantly disappointing economic data (from periphery to the core now), and central bank transmission mechanisms that are entirely clogged and useless for anything but stuffing the pockets of bloated bank balance-sheets with domestic sovereign debt, it is no wonder Germany's Bundesbank has said 'enough'. "If we pursued our own monetary policy... it would look different," explained Bundesbank chief Jens Weidmann. As Reuters reports, Weidmann noted that many savers in Germany were irritated by low interest rates and property prices were overvalued in some big city areas in Germany; implicitly threatening the ECB's chatter-box that "this phase of low interest rates, this phase of expansive monetary policy, should not last longer than is absolutely necessary."

 

As Reuters reports,

The European Central Bank's interest rates are too low for Germany, Bundesbank chief Jens Weidmann said on Saturday, adding that ECB monetary policy should remain expansive for no longer than absolutely necessary.

 

Speaking at a Bundesbank open day for the public, Weidmann noted that many savers in Germany were irritated by low interest rates but said these were aimed at supporting investment and consumption.

 

...

 

"It is clear that monetary policy, when seen from a German viewpoint, is too expansive for Germany, too loose," Weidmann told a crowd at the start of the open day. "If we pursued our own monetary policy, which we don't, it would look different."

Problems are coming...

Bundesbank Vice President Claudia Buch said property prices were overvalued in some big city areas in Germany by up to 20-25 percent, but that there was no acute risk of a price bubble forming.

 

Repeating a warning he has made previously about the risks of leaving policy loose for too long, Weidmann added: "This phase of low interest rates, this phase of expansive monetary policy, should not last longer than is absolutely necessary."

But - for now - we take our lumps for the greater good of the United States of Europe...

The ECB cut interest rates to record lows last month as part of a package of measures to breathe life into a sluggish euro zone economy, where inflation is running far below the central bank's target and there is a dearth of credit to smaller firms.

 

The German economy, Europe's largest, has been outperforming other countries in the bloc, however.

 

"But we are in a currency union," he said. "That means that in our monetary policy decisions, we must orientate ourselves to the whole currency union."

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But, but, but everyone said Europe was fixed... It seems as we draw closer to that day of judgment (when AQR proves nothing and Draghi is froced to admit that TLTROs were useless), the "euro" will once again be in doubt as politicians seek an 'out' by blaming someone else. Given the recent election - it's clear the people are not amused.