Europe News

Bundesbank president: Did not support further ECB stimulus

Want for ECB to be less accommodative than it is: Bundesbank president
VIDEO2:2402:24
Want for ECB to be less accommodative than it is: Bundesbank president

The president of the German Bundesbank has told CNBC that he could not support the European Central Bank's recent stimulus decisions, adding that monetary policy shouldn't be accommodative for more than it is needed.

"No single person is running the ECB alone, it's the governing council that decides so you have to find compromise and find a consensus around these decisions," Jens Weidmann, President of the Bundesbank told CNBC Thursday.

"However as you might know, I was not very supportive of the last further stimulus that the governing council decided, because it involved further sovereign bond purchases which I view quite critically."

"So the monetary policy stance that would ensue from that would be less accommodative than it currently is of course."

In December, the ECB announced that it would continue its multibillion-euro bond-buying program, but at a reduced pace, with the shift expected to start in just over a month's time.

The current asset purchases of 80 billion euros ($84.5 billion) a month was previously expected to finish next month; however the ECB decided in December to extend this until the end of 2017, with monthly purchases being reduced to 60 billion euros from April.

Jens Weidmann
Eric Piermont | AFP | Getty Images

Weidmann told CNBC that policymakers shouldn't "become trapped" by certain factors before the program has ended.

"We have to make sure as monetary policymakers, that our monetary policy is not longer accommodative than is really necessary to ensure our objectives," Weidmann told CNBC.

"So we shouldn't become trapped in the meantime in a game with fiscal policy or with a view to avoid financial stability risks, to be longer expansionary than is really necessary."

Weidmann, who is a member of the ECB's governing council, said back in January that the euro zone had begun 2017 on a fairly positive note; adding that if the recent rise in inflation continued at a relatively sustainable pace, the ECB should start looking for an exit from its stimulus plan; Reuters reported.

In a statement accompanying the Bundesbank's annual report — released on Thursday — Weidmann stressed this point of not overstretching stimulus, saying it was 'only politicians can lead the economy back to a path of sustained, higher growth,' and central banks shouldn't 'be stretched beyond breaking point.'

The central bank went on to add that the German economy was continuing to stay in good shape, with the euro area showing a pick-up in economic activity as well.

No doubts about the existence of the euro zone: Bundesbank president
VIDEO1:5701:57
No doubts about the existence of the euro zone: Bundesbank president

When asked about whether he had any doubts on the existence of the euro zone, Weidmann told CNBC "not at all".

The future of the euro zone and the European Union have been put under the microscope as of late, as political parties from across the continent have called for referendums on their membership of political-economic bloc. In June 2016, the U.K. voted to leave the European Union but has yet to trigger formal talks to start the process.

Weidmann isn't the only central banker to comment on the state of the euro zone.

At the World Economic Forum, ECB executive board member Benoît Coeuré said while Europe had some "homework to do" in strengthening the euro zone and staying united, the euro zone is currently "much more resilient than it was a couple of years ago," with reforms, growth and structure being much more solid.

Weidmann's comments come as the Bundesbank posted a distributable profit of 399 million euros for the 2016 financial year on Thursday, compared to 2015's figure of 3.2 billion.

Reuters reported this was its smallest profit seen in more than a decade, as it prepares for potential losses on the bonds it has bought from the European Central Bank.

—CNBC's Sam Meredith and Reuters contributed to this report.

Follow CNBC International on Twitter and Facebook.