Lagarde, Weidmann Clash Over Inflation Response

German central bank head set up a clash over Eurozone monetary policy warning that inflation is to stay above the ECB’s target for longer than expected.

Jens Weidmann told a banking conference in Frankfurt on Friday: “Given the considerable uncertainty about the inflation outlook, monetary policy should not commit to its current very expansionary stance for too long.”

Weidmann’s comments conflict with those by Christine Lagarde a few hours earlier, when the ECB president told the same event that rate-setters should remain “patient” to avoid tightening policy prematurely, despite soaring Eurozone inflation that is “unwelcome and painful”.

“We must not rush into a premature tightening when faced with passing or supply-driven inflation shocks,” said Lagarde, indicating she expects the ECB to maintain a sizeable stimulus at its meeting next month even as other central banks reduce support.

Their speeches laid bare divisions among ECB rate-setters ahead of their meeting next month.