MNI: ECB Weidmann: Not Unrealistic to See 1st Rate Hike Mid-19

By Christian Vits

     FRANKFURT (MNI) - Market expectations that the first European Central Bank

interest rate increase for the current cycle will come in the middle of next

year are a plausible anticipation of the way forward, Governing Council member

Jens Weidmann said Monday.

     "Markets expect a first hike in interest rates at about the middle of next

year, that is probably not unrealistic," the Bundesbank President said. He also

underlined that financial markets for some time forecast an end of the ECB's

asset purchases "still in 2018."

     But even without net bond buys, monetary policy will maintain its expansive

stance, Weidmann added, as the bank announced the re-investment of maturing

assets.

     "The end of net purchases is only the starting point of a multi-year

normalisation of monetary policy," he said. "Therefore, it is so important to

actually start it soon."

     Such a normalisation of policy will also open-up some leeway for the

central bank to react on possible future economic downturns. "Because the

current upswing won't last forever either," Weidmann stressed.

     With a view to current trade tensions Weidmann said that it is in no one's

interest to spark a trade war. If anything, it should be the aim to reduce

existing trade barriers instead of avoiding new tariffs or keeping them low.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

[TOPICS: M$E$$$,M$G$$$,M$X$$$,MC$$$$,M$$EC$]