ECB independence fuels fresh French-German exchange
Sunday, 23 September 2007
FRANKFURT, Sept 22 (AFP): French President Nicolas Sarkozy's repeated barbs directed at the European Central Bank (ECB) have spurred another Eurozone heavyweight, Germany, to voice renewed backing for ECB independence.
And while Spain has advised the bank to stop raising interest rates, still other Eurozone members such as Italy and Luxembourg support the ECB's status and have suggested they view political remarks as bothersome or marks of weak economic policies.
"Anybody who wants Europe to have a successful monetary policy based on price stability will not call into question the independence of the ECB and the euro," German Finance Minister Peer Steinbrueck said yesterday .
His remark came a day after German Chancellor Angela Merkel herself rode once again to the ECB's defence, saying: "The whole government including myself believes in the independence of the ECB."
Germany is the ECB's staunchest backer, with its independence a direct heritage from the German central bank. Merkel's comments were made during the Bundesbank's 50th birthday bash in Frankfurt.
They also came just after Sarkozy called implicitly for the bank to cut its main interest rates in the wake of an international banking crisis that has threatened growth in the United States and Europe.
"In light of the economic situation, the US Federal Reserve cuts its rates, but the ECB does not," Sarkozy said in Paris.
On Tuesday, the Fed slashed its base federal funds rate by a half point to 4.75 per cent to stimulate an economy imperiled by housing and credit market stress.
The ECB, meanwhile, has kept its main rate steady at 4.0 per cent.
And while Spain has advised the bank to stop raising interest rates, still other Eurozone members such as Italy and Luxembourg support the ECB's status and have suggested they view political remarks as bothersome or marks of weak economic policies.
"Anybody who wants Europe to have a successful monetary policy based on price stability will not call into question the independence of the ECB and the euro," German Finance Minister Peer Steinbrueck said yesterday .
His remark came a day after German Chancellor Angela Merkel herself rode once again to the ECB's defence, saying: "The whole government including myself believes in the independence of the ECB."
Germany is the ECB's staunchest backer, with its independence a direct heritage from the German central bank. Merkel's comments were made during the Bundesbank's 50th birthday bash in Frankfurt.
They also came just after Sarkozy called implicitly for the bank to cut its main interest rates in the wake of an international banking crisis that has threatened growth in the United States and Europe.
"In light of the economic situation, the US Federal Reserve cuts its rates, but the ECB does not," Sarkozy said in Paris.
On Tuesday, the Fed slashed its base federal funds rate by a half point to 4.75 per cent to stimulate an economy imperiled by housing and credit market stress.
The ECB, meanwhile, has kept its main rate steady at 4.0 per cent.