Fri, Apr 11 2008, 14:51 GMT
http://www.djnewswires.com/eu
ECB's Weber Sees No Room At All To Discuss Interest Rate Cut
WASHINGTON -(Dow Jones)- European Central Bank governing council member Axel Weber said Friday he doesn't share the International Monetary Fund's view that there is room for an interest rate cut by the central bank, as the fund underestimates upward pressures on prices.
Weber, who is also president of the Deutsche Bundesbank, told reporters ahead of the Group of Seven leading industrialized nations' meeting of finance officials in Washington that the global economy is still in a robust state and the euro-zone and German economies are in a better shape than that of the U.S.
"There is no leeway at all to discuss a rate cut," Weber said. Inflation in the euro zone is likely to have peaked in March - a preliminary estimate for the month showed consumer inflation at an annual clip of 3.5% - but the consumer price index is expected to stay above 3% for most of the year before falling below 3% toward the end of the year.
On the growth outlook, Weber said that the IMF has focused too strongly on a risks scenario and a possible impact of the financial crisis on the world economy. He stressed that the outlook is too pessimistic.
Speaking at the same briefing, German Finance Minister Peer Steinbrueck also said that the IMF's growth outlook is too pessimistic.
In its World Economic Outlook report Wednesday, the IMF forecast 1.4% growth for Germany for this year and only 1.0% for 2009. In October, the IMF in its economic outlook report forecast 2.0% real gross domestic product growth while in its annual economic policy consultation on Germany from February, it only forecast 1.5% growth for the country.
The IMF's most recent prediction is less than the 1.6%-1.7% Steinbrueck forecasts for 2008 German economic growth.
For the euro zone, the IMF now forecasts 1.4% growth for 2008 and 1.2% for 2009.
Steinbrueck reiterated that there is no reason to cut the government's 2008 growth forecast of 1.7%.
Looking ahead at 2009, Steinbrueck said it is currently hard to predict the country's economic performance as the financial crisis will "to a certain extent" hurt the German economy, albeit to a lesser extent than it will the U.S. economy.
"The U.S. are facing a recession," Steinbrueck said.
Steinbrueck also said he can't follow the IMF's recent estimate that the financial market crisis might lead to potential losses from write-downs of bad debt approaching $1 trillion, particularly since in February it estimated the potential losses to reach around $400 billion.
Asked whether the weak U.S. dollar will play a role in the G7 discussions, Steinbrueck said that it would, but behind closed doors He said that a euro trading at $1.60 "will massively touch upon German economic interests."
His comments come as Germany's economy over the recent years has strongly depended on export growth. In the past, Steinbrueck has been known for saying he "loves" the strong euro, but he hasn't repeated such comments in recent months.
WASHINGTON -(Dow Jones)- European Central Bank governing council member Axel Weber said Friday he doesn't share the International Monetary Fund's view that there is room for an interest rate cut by the central bank, as the fund underestimates upward pressures on prices.
Weber, who is also president of the Deutsche Bundesbank, told reporters ahead of the Group of Seven leading industrialized nations' meeting of finance officials in Washington that the global economy is still in a robust state and the euro-zone and German economies are in a better shape than that of the U.S.
"There is no leeway at all to discuss a rate cut," Weber said. Inflation in the euro zone is likely to have peaked in March - a preliminary estimate for the month showed consumer inflation at an annual clip of 3.5% - but the consumer price index is expected to stay above 3% for most of the year before falling below 3% toward the end of the year.
On the growth outlook, Weber said that the IMF has focused too strongly on a risks scenario and a possible impact of the financial crisis on the world economy. He stressed that the outlook is too pessimistic.
Speaking at the same briefing, German Finance Minister Peer Steinbrueck also said that the IMF's growth outlook is too pessimistic.
In its World Economic Outlook report Wednesday, the IMF forecast 1.4% growth for Germany for this year and only 1.0% for 2009. In October, the IMF in its economic outlook report forecast 2.0% real gross domestic product growth while in its annual economic policy consultation on Germany from February, it only forecast 1.5% growth for the country.
The IMF's most recent prediction is less than the 1.6%-1.7% Steinbrueck forecasts for 2008 German economic growth.
For the euro zone, the IMF now forecasts 1.4% growth for 2008 and 1.2% for 2009.
Steinbrueck reiterated that there is no reason to cut the government's 2008 growth forecast of 1.7%.
Looking ahead at 2009, Steinbrueck said it is currently hard to predict the country's economic performance as the financial crisis will "to a certain extent" hurt the German economy, albeit to a lesser extent than it will the U.S. economy.
"The U.S. are facing a recession," Steinbrueck said.
Steinbrueck also said he can't follow the IMF's recent estimate that the financial market crisis might lead to potential losses from write-downs of bad debt approaching $1 trillion, particularly since in February it estimated the potential losses to reach around $400 billion.
Asked whether the weak U.S. dollar will play a role in the G7 discussions, Steinbrueck said that it would, but behind closed doors He said that a euro trading at $1.60 "will massively touch upon German economic interests."
His comments come as Germany's economy over the recent years has strongly depended on export growth. In the past, Steinbrueck has been known for saying he "loves" the strong euro, but he hasn't repeated such comments in recent months.
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