FRANKFURT (Reuters) - The European Central Bank faces hurdles on the way to normalizing its monetary policy after years of extraordinary stimulus, ECB policy maker Jens Weidmann said in an interview published on Thursday.
The ECB is due to end its money-printing program at the end of this year after pumping 2.6 trillion euro ($3.06 trillion)on the bond market and has hinted at a rate hike late next year if inflation in the euro zone extends its gentle acceleration.
But clouds are already forming on the horizon, with emerging economies feeling the squeeze of higher U.S. interest rates and trade frictions between the United States and China weighing on growth.
Even Weidmann, the head of Germany’s central bank and a prominent hawk on the ECB’s policy-making body, struck a cautious tone.
“(Policy normalization) is a long road which hides big challenges and whose end-point has yet to be determined,” he told financial newspaper Handelsblatt.
Long-considered the front-runner to succeed Mario Draghi as ECB President next year, Weidmann will need the support of German Chancellor Angela Merkel to secure the job at the helm of the euro zone’s most powerful institution.
Echoing Merkel, Weidmann poured cold water on the notion of creating a parallel European payment system to shield companies from the United States’ policy choices, such as recent sanctions against Iran.
“Many companies and banks are linked to the United States anyway,” Weidmann said.
The Bundesbank’s President also said the idea of boosting the role of the euro in international commerce, put forward by the head of the European Commission Jean-Claude Juncker, was “not a monetary policy goal” for the ECB.
($1 = 0.8501 euros)
Reporting By Francesco Canepa; Editing by Toby Chopra