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Frankfurt, Germany • A top European Central Bank official is warning that the bank's stimulus measures are easing pressure on indebted governments to straighten out their finances.
Jens Weidmann of Germany said Wednesday that current low borrowing rates offer "few incentives for governments to consolidate their budgets" since debt does not incur high interest costs.
Weidmann sits on the ECB's governing council by virtue of his post as head of Germany's Bundesbank, or national central bank. He has been a steady critic of the ECB's decision to use newly printed money to purchase government bonds and corporate bonds, driving interest yields down.
He is just one vote on the 25-member council. Stimulus critics, however, have grown louder as the eurozone economy recovers and inflation nears the bank's goal of just under 2 percent.
Inflation figures due out Thursday could intensify pressure on the ECB to signal when it intends to start withdrawing the bond-purchase stimulus, known as quantitative easing. In December, the bank decided to continue purchases through the end of this year while reducing them from 80 billion euros a month to 60 billion euros a month from April.
The stimulus is aimed at raising inflation in line with the bank's job of maintaining price stability for the 19 countries that use the shared euro currency. The stimulus is also aimed at supporting the economy through a turbulent political year with elections in the Netherlands, France and Germany.
Analysts say the inflation figure could be as high as 2.0 percent for February, up from 1.8 percent in January. Most analysts think the bank will not back off its stimulus but may signal at some point later this year its intentions to start tapering it off gradually in 2018.
Bank officials point out that the current higher inflation figures are the result of comparisons with a period of very low oil prices last year, not of fundamental price pressures in the economy. Core inflation, which leaves out fuel prices, remained stuck at 0.9 percent in January.