EU FINMIN debate ECB rate rises

The rise in the Euro’s value against the dollar and yen is a licence to print money for some, but the ECB met EU finance ministers today in some frustration. A strong euro hits exports, and its surge in recent days to a 20-month high against the greenback, and a record peak in Japan, means some are questioning rising interest rates.

The Euro is on an inexorable eleven month rise: neither strong US growth, war, nor exploding energy and commodity prices have blown it off course. 11 percent up on the year, two percent since last Wednesday and a rosier outlook for the German economy; so some say the ECB should rule out another rates rise in December, with another pencilled in for the first quarter of the new year.

Eurozone ministers are torn between growth and allowing the ECB to carry out its inflation-hunting role; none more so than France, whose trade minister was echoed by finance minister Thierry Breton on Monday. He called for “ collective vigilance” from eurozone members. “A strong euro impedes the eurozone”, he reportedly added.

From the meeting Eurogroup chair Jean Claude Junker insisted things were “lengths away from the critical zone” and said he was “not too concerned by the current strength of the euro”. The ECB itself insists all its options are open for 2007, when it predicts eurozone growth will slow from two point five to two point one percent.

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