Bundesbank’s Mauderer: Still Need Accommodative Monetary Policy

13 November 2020

By David Barwick – FRANKFURT (EconoStream) – Bundesbank board member Sabine Mauderer said Thursday that an accommodative monetary policy stance remains necessary in the current environment.

In a virtual speech, a text of which was published by the Bundesbank, Mauderer, referring to the crisis, said, ‘In this difficult situation it was and is important to keep interest rates low and to provide banks with ample liquidity. Moreover, an expansionary monetary policy is important because the economic slump is dampening price prospects.’

Mauderer attributed weak Eurozone inflation primarily to energy prices and secondarily to specific industries such as travel-related services.

‘The temporary reduction in value-added tax in Germany is also having an impact on the inflation rate - not only in this country but also in the Eurozone as a whole’, she said. ‘However, this effect is likely to expire and may even be reversed for a time when the VAT rate is raised again in 2021.’

It is clear, she said, that unconventional measures like the ECB’s pandemic emergency purchase programme ‘must be exceptional and temporary’.