Bundesbank president Jens Weidmann has told his fellow Germans to stop complaining about low interest rates on their savings – now even lower after the last ECB rate cut.
Mr Weidmann opposed last week’s cut, preferring to postpone a final decision until December, but he told Die Zeit yesterday the negative reaction in the German media was overblown and shortsighted.
The Bundesbank chief played down his interest rate row with ECB president Mario Draghi, saying it was "good that we struggle" over monetary policy decisions. But he had unusually strong words for his fellow Germans and their allergic reaction, amplified by the domestic media, that the interest rate cut punished savers.
"Everyone who wants to invest their money safely feels the low interest rate, that applies as much to an Italian saver as a Germany, " said Mr Weidmann. "The saver has to be able to count on interest rates being increased at the right time if the inflation risks increase."
The ECB’s mandate, he added, was to preserve the euro’s price stability “not to guarantee yields”.
“It’s important to remember that we’re not just savers. We are also employees, perhaps we want to buy a property, we are taxpayers,” he added. “In these roles we profit from the low interest rates because perhaps they secure our job, make it cheaper to take out a mortgage and reduce the burden on the state budget.”
The ECB reduced its main refinancing rate by a quarter of a percentage point to 0.25 per cent on November 7th.Inflation in the euro area slowed to its lowest level in four years last month at just 0.7 per cent, less than half the ECB’s stated target of at or just below 2 per cent.
