ECB´s Issing says US twin deficits unsustainable
Tuesday, December 7, 2004 9:33:28 AM
afxpress.com
ECB's Issing says US twin deficits unsustainable FRANKFURT (AFX) - European Central Bank chief economist Otmar Issing said the US twin current account and budget deficits are unsustainable and the US is well aware of this
"This is an imbalance, which cannot be sustained, and the Americans know this very well," said Issing in an interview with Slovenian newspaper Delo
A copy of the interview was published by the ECB
Issing reiterated ECB president Jean-Claude Trichet's description of the euro's recent sharp rise against the dollar as "brutal and therefore unwelcome", but he declined to comment on the possibility of foreign exchange market intervention
He said euro zone inflation, currently 2.2 pct, is still too high, but the ECB will do everything necessary to bring it back below its 2.0 pct price stability ceiling
"The euro area inflation rate is too high at present, influenced strongly by the oil price increases. We will do everything we can to bring inflation back below 2 pct in the medium term," he said
[What a lie. Exactly how are they going to influence the price of oil, other than by not growing perhaps. If he says inflation is too high and "everything" will be done, they they should raise rates. - mish]
But he said the ECB decided to leave interest rates unchanged last week because it remains optimistic about the inflation and growth outlook
[ottimistib about inflation and growth! yeah right. Now they sound like Greensoan - mish]
"It is true that the outlook for growth has been revised downwards. But, the positive message is that growth is expected to continue. While the short-term outlook for inflation has deteriorated in the context of oil price increases, our assessment of price developments over the medium term remains positive
"Accordingly, the governing council decided to leave the key ECB interest rates unchanged at their historically low levels," he said
Issing said a number of current euro zone countries are setting a bad example to new EU members in eastern Europe by running high budget deficits
"Certainly, at present, there are quite a number of 'old' member states that are not giving good examples to the 'new' member states. There is no doubt about that. Fiscal policies in quite a number of countries are a matter of strong concern," he said
[Shazaam - Did we find Rumsfeld's replacement? A better choice for Sec of state of the US? mish] |
