Nout Wellink: "Central banks are going to have a very difficult time"

Nout Wellink expects that central banks will have a very difficult time in the coming years, because there is an anti-establishment movement going on worldwide and central banks are part of that establishment. After the extreme monetary stimulus of recent years, central banks must now raise interest rates. They have to take unpopular measures, which will increase the resistance from politicians. Wellink refers, among other things, to President Trump's criticism of the Federal Reserve's policy. He also sees that the situation in a country like Italy has not improved since the European debt crisis.

According to the former president of the Dutch Central Bank, it has become very difficult for central banks to pursue an effective policy. Lowering interest rates gave a boost to the economy, but also caused house prices to rise. As a result, houses have become almost unaffordable. In addition, there are also less visible side effects of monetary policy. According to Wellink, companies were maintained that were no longer viable. That, he says, is one of the reasons why there has been little productivity growth in recent years.

Wellink finds it striking that central bankers today express their expectations for the future with such conviction, because the future is very uncertain and they themselves probably do not know what will happen. He refers to a book about the policy of central banks in the crisis of the 1930s. With today's knowledge, we have to conclude that the four most important central bankers simply implemented the wrong policy at the time. According to Wellink, it is quite conceivable that our current approach will not turn out to be the right one either. Below you can see the conversation between Nout Wellink and Willem Middelkoop at Café Weltschmerz.