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The moment for stopping of the unprecedented monetary stimulus by the ECB is close, as the economy is growing steadily and the pace of inflation is moving in the right direction, according to the President of the Deutsche Bundesbank, Jens Weidmann. He is also a member of the Governing Council of the ECB and considers that the central bank should not make further changes to the key parameters of the bond purchase program. The ECB buys bonds worth 2.3 trillion EUR in attempt to revive growth and inflation. The finance institution is investing mainly in government bonds and the program is known as the so-called Quantitative easing, and being long criticized by major European economies such as Germany.

Purchases are scheduled to be completed by December this year, with the ECB expected in the autumn to decide whether to extend, suspend or curtail its program.

“Considering the possible continuation of the bond purchase program, such a move has not yet been discussed in the Council of the ECB”, said Jens Weidmann. “But in my opinion, if sustainable economic growth and rising inflation continue the way it is expected, the time to look at ending the ultra-weakened monetary policy had come”, added he. After years of flurry with deflation, the rise in prices is now well above 1%, but projections show that it will not reach the ECB target of 2% over the next few years.

A key question that will come to the attention of central bankers is the ECB’s policy to buy up to a third of each country’s debt. Given the relatively low debt burden of Germany, it is likely that this level will be reached in the first half of next year. Any extension will probably require a change to the rules of the program.

Serious risk of limiting the incentives could be pressed by governments as any increase in borrowing costs threatens to open a hole in national budgets after years of exceptionally weak credit conditions.

“Such a move could lead to political pressure on the board to keep loose monetary policy for longer than is necessary”, said the President of the Deutsche Bundesbank, Jens Weidmann. “Germany does not need any more incentives because employment and capacity utilization are high”, added he.

