ECB’s Mersch Opposed to (US) Zero Interest-Rate Policy - by Angus Whitley
European Central Bank council member Yves Mersch said he’s against following the example of the U.S. Federal Reserve and lowering interest rates to zero. “I do not consider that we are in the same position as other countries,” Mersch told Bloomberg News in Kuala Lumpur, where he was attending a meeting of central bankers. “We are an independent central bank.” He declined to comment further. The ECB has reduced its key interest rate to 2 percent, matching a record low, to fight Europe’s worst recession since World War II. President Jean-Claude Trichet signaled last week the bank may cut rates by another 50 basis points in March. Still, it would be “inappropriate” to lower the benchmark to zero, Trichet said. Mersch, who heads Luxembourg’s central bank, said he agrees with Trichet.
Note EU-Digest: Most European economists agree that lowering interest rates to zero is only a short term solution and mainly favors the business sector and not the consumers.
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