04/07/2003 13:27
The head of the European Central Bank on Thursday indirectly accused the governments of France, Germany and Italy of blaming the bank for their struggling economies and hinted there would be no interest rate cut when bank policymakers meet July 10.
ECB president Wim Duisenberg told a session of the European Parliament that prospects for price stability in the euro zone were "globally unchanged" from June 5, when the council of governors last met and reduced the bank's key rate by half a point to two percent.
"Let me be crystal clear on that -- the current monetary policy stance, in the eyes of the governing council, with interest rates at two percent, is regarded as being appropriate in the light of the developments we foresee for the medium-term future."
While the bank has cut its benchmark interest rate by 1.25 points to its lowest level since the euro was launched in January 1999, policymakers remain under pressure from euro-zone politicians to ease credit conditions still further in light of flagging growth and fears of increased joblessness.
But Duisenberg on Thursday bristled at the implication that the central bank was dampening economic momentum in the 12-nation euro zone.
"Monetary policy has done its part to create conditions for a resumption of economic growth and growth of employment in the euro area," he said.
"We have done our part. And it's now the case that governments -- maybe I sound a little bit sharp -- can no longer hide behind the ECB in order to try and cover up for their failure to enact the structural reforms which are so urgently required."
Duisenberg said his remarks were in response to recent calls for additional monetary easing from French Prime Minister Jean-Pierre Raffarin, German Chancellor Gerhards Schroeder and Italian Prime Minister Silvio Berlusconi.
He told parliament the bank expected inflation in the euro zone to come to around two percent for the rest of the year, which is the acceptable upper limit determined by the ECB, before falling sharply in early 2004.
Inflation in 2005 would edge back up toward two percent, according to the bank's forecast.
Duisenberg also said the bank saw no threat of deflation, which is a steady decline in prices that can eat into corporate profit, threaten jobs and wages and encourage consumers to hold off spending in hopes of further price falls.
"We expect no deflation, not in Europe and not in individual component parts of the euro area. Deflation is not around the corner."
The ECB president rejected a call by European Parliament deputy Hans Blokland for the publication of summary records of ECB council meetings and the balance of votes on rate decisions to improve transparency and avoid confusion in financial markets.
"May I refer to the decision taken last week by the (US) Federal Reserve System, where immediately in a press communique the decisions were enlightened and it was published how the members of the Federal Open Market Committee had voted," he asked.
"We all know by now that that has created more confusion than transparency in the markets," the ECB chief said.
Duisenberg said the ECB's preferred method of holding a news conference immediately after rate-setting council meetings made it the most transparent central bank in the world, even though it does not publish minutes of meetings or voting records.
"We believe that the tools chosen by the ECB to communicate and explain its decisions ensure transparency... and better reflect the institutional environment in which the ECB operates," Duisenberg said.
ECB president Wim Duisenberg told a session of the European Parliament that prospects for price stability in the euro zone were "globally unchanged" from June 5, when the council of governors last met and reduced the bank's key rate by half a point to two percent.
"Let me be crystal clear on that -- the current monetary policy stance, in the eyes of the governing council, with interest rates at two percent, is regarded as being appropriate in the light of the developments we foresee for the medium-term future."
While the bank has cut its benchmark interest rate by 1.25 points to its lowest level since the euro was launched in January 1999, policymakers remain under pressure from euro-zone politicians to ease credit conditions still further in light of flagging growth and fears of increased joblessness.
But Duisenberg on Thursday bristled at the implication that the central bank was dampening economic momentum in the 12-nation euro zone.
"Monetary policy has done its part to create conditions for a resumption of economic growth and growth of employment in the euro area," he said.
"We have done our part. And it's now the case that governments -- maybe I sound a little bit sharp -- can no longer hide behind the ECB in order to try and cover up for their failure to enact the structural reforms which are so urgently required."
Duisenberg said his remarks were in response to recent calls for additional monetary easing from French Prime Minister Jean-Pierre Raffarin, German Chancellor Gerhards Schroeder and Italian Prime Minister Silvio Berlusconi.
He told parliament the bank expected inflation in the euro zone to come to around two percent for the rest of the year, which is the acceptable upper limit determined by the ECB, before falling sharply in early 2004.
Inflation in 2005 would edge back up toward two percent, according to the bank's forecast.
Duisenberg also said the bank saw no threat of deflation, which is a steady decline in prices that can eat into corporate profit, threaten jobs and wages and encourage consumers to hold off spending in hopes of further price falls.
"We expect no deflation, not in Europe and not in individual component parts of the euro area. Deflation is not around the corner."
The ECB president rejected a call by European Parliament deputy Hans Blokland for the publication of summary records of ECB council meetings and the balance of votes on rate decisions to improve transparency and avoid confusion in financial markets.
"May I refer to the decision taken last week by the (US) Federal Reserve System, where immediately in a press communique the decisions were enlightened and it was published how the members of the Federal Open Market Committee had voted," he asked.
"We all know by now that that has created more confusion than transparency in the markets," the ECB chief said.
Duisenberg said the ECB's preferred method of holding a news conference immediately after rate-setting council meetings made it the most transparent central bank in the world, even though it does not publish minutes of meetings or voting records.
"We believe that the tools chosen by the ECB to communicate and explain its decisions ensure transparency... and better reflect the institutional environment in which the ECB operates," Duisenberg said.
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