18 April 2001, 13:17 IMF's Koehler says ECB rate cut would help world economy in critical phase
FRANKFURT (AFX) - IMF managing director Horst Koehler said the
European Central Bank should cut interest rates to boost both the euro
zone and the world economies at a critical period.
Speaking in an interview with Capital magazine released this
morning, Koehler said a rate cut from the ECB would not endanger its
mandate to maintain price stability.
"In the current critical phase for the euro zone and world
economies, lower interest rates in Europe would certainly help, without
endangering the ECB's stability policy", he said.
The ECB has so far resisted calls from Koehler and other leading
policy makers to cut rates, saying risks to price stability have yet to
disappear.
An interest rate cut from the ECB would both create an important
signal in Europe and show worldwide monetary policy does not have
divergent aims, Koehler said.
However, Koehler added that although a world financial crisis
cannot be excluded, the probability of it occurring is very small.
Although the shape of the U.S. slowdown has turned out to be worse
than feared, the signs remain mixed, with consumer confidence holding
up well and stable prices continuing, he said.
"We really have no reason to get worked up about apocalyptic crash
scenarios", he said.
On the euro, Koehler said he remains optimistic over the long term
future for the embattled currency, despite its disappointing
performance so far this year.
He said its current weakness may be linked to huge amounts of
deutschmarks being exchanged into U.S. dollars across eastern Europe
amid concerns about the effects of the introduction of euro notes and
coins next year.
© 1999-2024 Forex EuroClub
All rights reserved