European Central Bank policymaker and the head of Germany's Bundesbank, Jens Weidmann, said that eurozone states and the private sector should not count on the current phase of low interest rates continuing forever.
Weidmann also reiterated criticism of the ECB's vow to buy up the bonds of struggling eurozone states and said that markets had overlooked the fact that ECB President Mario Draghi had said that the bank would operate within its mandate - meaning there would be restrictions on the bond buys. He said: "Neither states nor the private sector should expect the current phase of low interest rates to continue permanently. They must be able to service their debt in a normal interest rate situation too."
Weidmann said eurozone states' debt problems should not lead the ECB to hesitate about tightening monetary policy if needed.
Weidmann has previously warned against keeping interest rates too low for too long, saying all central banks faced the challenge of withdrawing from a loose monetary policy once risks to price stability emerged. Weidmann said the restrictions on the ECB's bond buying programme were a step in the right direction. "But they do not solve the fundamental problem that arises from the selective purchase of sovereign bonds with bad ratings."
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