MNI BRIEF: Weidmann Warns of Post-Covid Inequality Increase

The Covid-19 crisis could lead to a protracted rise in inequality across age, gender and economic groups, the head of German Bundesbank warned in a speech Thursday, adding that monetary policy should not be used to pursue distributive aims beyond preserving price stability.

"The potential rise in inequality as a consequence of the pandemic is a major concern to me," Jens Weidmann said, citing recent work by, among others, the economist Moritz Schularick.

ECB monetary policy was already exceptionally expansionary when the pandemic crisis first hit, Weidmann said. "However, the cyclical nature of monetary policy implies that there will also be reverse effects eventually. If required to preserve price stability, monetary policy will have to be normalised again," he added.