ECB hawk Weidmann plays down chance of imminent rate rise


German government borrowing costs reversed some of their gains on Friday after Germany’s top central banker played down the chances of an imminent rise in interest rates.

Jens Weidmann, president of the Bundesbank, said in Bavaria on Friday evening that rates in the eurozone would stay at their historical lows for now.

“It would be particularly stressful for the banks if the long period of low interest rates were to be ended by a rapid, sharp increase in interest rates,” said Mr Weidmann. “As far as central bank rates in the euro area are concerned, however, the immediate risk of change is currently low.”

The intervention by the man seen as the European Central Bank’s most hawkish policymaker triggered a fall in the yield on the ten-year German government bond, or Bund, from 0.543 per cent to 0.504 per cent. The yield mirrors the cost of borrowing for the German government, with a lower yield making it cheaper to finance debt.

The move partly reversed a rise in yields seen on Thursday after minutes of the ECB’s December monetary policy vote signalled the bank would soon take another step towards ending its quantitative easing programme. The minutes showed the ECB was reconsidering how the region’s economic “expansion” would weigh on its decision-making, sending yields on German debt to a two-year high.

Markets viewed the ECB’s optimism as a signal that the bank could begin removing some of its crisis-era stimulus sooner than they had expected.

The benchmark ECB interest rate, the main refinancing rate, is at zero. The bank’s deposit rate is minus 0.4 per cent, a rate that in effect imposes a levy on banks that hold their reserves at central banks around the euro area.

Mr Weidmann’s comments underscore the ECB’s commitment to keep interest rates on hold until they stop buying bonds under their €2.3tn quantitative easing programme. The banks has pledged to buy €30bn-worth of bonds each month from now until September.

Interest rates are not expected to rise until the middle of 2019 by most ECB watchers.

“The governing council unequivocally stated that interest rates will remain at their current level for a longer period of time and well beyond the time horizon of net bond purchases. And as you know, bond purchases will continue at half the volume until at least September this year,” the Bundesbank president said.

Mr Weidmann reiterated his opposition to QE, saying the bond purchases were no longer necessary, given the strength of the recovery. He said the ECB should set a specific end date for QE.

Additional reporting by Roger Blitz in London

stock market latest prices ,share trading apps ,what time does the market close today ,stocks and shares uk ,stock m ,investment market news ,stock trading apps ,stock market singapore ,student stock trader ,stock market trading today ,stock market daily summary ,world stock market quotes ,news stock market today ,wall street market report ,stock market wednesday ,stock buying app ,robinhood free stock trading ,stock market trading app ,stock trading news ,world news stock market ,on the stock market ,stocktrader ,stock market buy now ,paper trade stocks ,world stock market information ,new on the stock market ,what happened to stock market today ,stocks and shares today ,stock market how to ,breaking stock market news ,stock market up ,what’s happening with the stock market today ,stocks and shares game ,stock breaking news ,investment apps ,financial market data ,stock investing apps ,money market news ,trading market news ,penny stocks app ,this week in stock market ,stock market stocks ,online trading app ,best stock market sites ,stock market websites ,live financial markets ,daily stock market report ,stocks singapore ,stock market money ,sa stock market news ,sg stock ,wall street stock quotes ,stock market up today ,breaking news stocks ,money market stocks ,new market stock price ,stock market tracker ,stocks app ,trade market today ,investing ,wall street stock news ,wall street stocks today ,stock market app ,market stock ,penny stock trading app ,how’s the stock market doing ,stock market data ,stock market stock market ,us stocks today ,stock market sites ,stock market data today ,today’s money market ,stock exchange app ,news on financial markets ,what happened in the stock market today ,wall street stock market ,wall street stock market news ,how’s the market doing today ,what is the stock market ,new to stock market ,stock market trends today ,my stocks ,what is affecting the stock market today ,best stock news ,virtual trading app ,trading apps ,market down today ,stock market new york ,market stock price ,stock wars ,stock marketing ,latest stock market ,stock market ticker ,wall street trading today ,market data ,finance stock market ,current stock market data ,financial markets data ,stock market today live ,world stock market report 

Source link