ECB stimulus appropriate, legitimate to think of exit: Weidmann

FILE PHOTO: German Bundesbank President Jens Weidmann arrives for the G7 Financial ministers meeting in the southern Italian city of Bari

FRANKFURT (Reuters) – The European Central Bank’s utra-loose monetary policy is “still appropriate in principle” but it is legitimate to discuss the timing of an exit as inflation recovers, Jens Weidmann, Germany’s representative on the ECB’s Governing Council, said on Monday.

“Given the dampened price pressure, an expansive monetary policy is still appropriate in principle,” Weidmann, who heads Germany’s powerfull Bundesbank and has been the most outspoken critic of the ECB’s policy in recent years, said at a reception in Berlin.

“But as a result of the economic recovery and a predicted inflation rate of almost 2 percent in 2019, it is quite legitimate to ask when the Governing Council should consider monetary policy normalization”, Weidmann added.

The ECB Governing Council meets next Thursday in Tallinn to asses its policy stance. ECB President Mario Draghi said on Monday that the euro zone still requires substantial stimulus, even if growth in the 19-member currency bloc has improved.

(Reporting by Andreas Framke; Editing by Francesco Canepa)