ECB hawk and German central bank chief Jens Weidmann quits, cites personal reasons

October 21, 2021: -On Wednesday, European Central Bank member Jens Weidmann announced that he would be stepping down as governor of the German central bank at the year-end due to personal reasons.

“I have concluded that more than ten years is a good measure of time to turn over a new leaf for the Bundesbank, but also me personally,” Weidmann said in a letter to the bank’s staff.

He has been in charge of the German central bank since 2011, at the height of the sovereign debt crisis in the eurozone. Throughout his tenure, Weidmann has been one of the biggest names within the decision-making body of the ECB, famous for his more conservative views on policy.

Weidmann’s departure comes when the ECB has a difficult choice to make over what to do with higher inflation across the region. Speaking about ECB policy, Weidmann said the bank played a “stabilizing role of monetary policy during the pandemic” and highlighted the recent decision to have a “symmetrical, clearer inflation target.”

“Side effects and, in particular, financial stability risks are to be given greater attention,” he said.

Some analysts have contemplated whether his departure links to the current monetary policy stance of the ECB.

“The next hours and days might reveal whether there are any reasons related to the ECB’s current monetary policy stance and inflation assessment involved in Weidmann’s decision,” Carsten Brzeski, global head of macro at ING, said in a note.

He added that Weidmann’s announcement “comes at a crucial time for the ECB. The camp of the hawks is losing an important voice.”

Within the German political scene, Weidmann’s decision also means that the incoming German government, likely led by the socialist SPD party, will play a role in the choice of the next governor.

Andrew Kenningham, the chief Europe economist at Capital Economics, said that “the new President is likely to be more supportive of the generally dovish and ‘green’ direction in which Christine Lagarde is leading the ECB.”