Germany's Weber says no ECB policy changes before 2011

20th August 2010, Comments 0 comments

German central bank chief Axel Weber indicated Friday the European Central Bank would pursue relaxed monetary policies into 2011 while suggesting he might not be a "diplomatic" ECB head.

Weber, a leading candidate to take over as ECB head next year, was quoted by Bloomberg television as saying the central bank should help commercial banks make it through the critical period at the end of the year before deciding when to withdraw exceptional measures taken to support them through the crisis.

"Most of these discussions about the continuation of the exit I think will be focused on the first quarter" of 2011, Weber said.

That suggested the ECB would continue to provide commercial banks with a full allotment of their bids for central bank loans.

But Weber added: "It's clear that we need to re-embark on a normalisation procedure" to gradually get the eurozone banking system back to where it was before the global financial storm broke in August 2007.

Meanwhile, the German central bank governor was asked if he was diplomatic enough to head the ECB after current president Jean-Claude Trichet steps down in October 2011.

"It's important to be a diplomat for the diplomatic corps, it's not so important for a central bank," Weber said.

He is considered a policy "hawk" due to a consistent focus on battling inflation but some observers say Weber might lack the sense of consensus attributed to another candidate, Italian central bank governor Mario Draghi.

"I think it's very important for central banks to be clearly focused and also, if necessary, to deliver undiplomatic messages to governments," Weber said.

Barclays Capital analyst Julian Callow said that "Weber's views concerning the full (loan) allotments might also be influenced by his desire to position himself as the successor to Mr. Trichet as ECB president."

© 2010 AFP

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