European Central Bank President Jean-Claude Trichet has revealed policy differences with Bundesbank chief Axel Weber.
Trichet said the bank’s governing council as a whole does not agree with Weber’s recent remarks that the ECB’s government bond-buying programme had not worked and should be scrapped.
In an interview with Italian daily La Stampa, Trichet said “No! This is not the position of the Governing Council, with an overwhelming majority.”
“This nonstandard measure, like all other such measures, was designed to help restore a more normal functioning of our monetary policy transmission mechanism. And we are withdrawing all the liquidity, euro for euro, that is supplied through this programme,” Trichet said.
He also struck a less hawkish note on interest rate policy than Weber.
Last week, Weber said policymakers should not wait too long before withdrawing emergency liquidity measures and raising interest rates, prompting widespread speculation of divisions among the ECB’s leaders.
“As you know, I never comment on remarks made by fellow members of the Governing Council,” Trichet told La Stampa.
“What is important, of course, is that there is only one single currency; there is one Governing Council, only one monetary policy decision, and one president, who is also the porte-parole of the Governing Council,” he said.
“At the last ECB press conference, I said very clearly that current interest rates are appropriate,” he said, adding that the ECB had built a “very, very remarkable track record” on price stability, with average annual inflation of 1.97 percent since it took over charge of monetary policy.
“And thanks to this credibility, inflation expectations are extremely well anchored for the next five and 10 years in line with our definition of price stability,” he said.
Weber is an influential member of the governing council and a top candidates to take over from Trichet when he steps down next year.