The ECB must respond to the strengthening euro
European Central Bank (ECB)and euro area finance ministers should take action to adjust the value of the EU currency, instead of hiding behind US policy-makers, urges the European Trade Union Confederation (ETUC).
The euro exchange rate has recently breached the 1.50$ barrier. The euro’s continuing appreciation is becoming alarming. An excessively expensive euro will cost European jobs, coming as it does on top of other setbacks to growth (the sub-prime financial crisis and credit squeeze, the US recession, and the end of the construction boom in several EU countries).
The ETUC calls on the Governing Council of the ECB, which meets today, to recognise at last that the balance of risks has shifted and that the threat to growth is now so serious that an urgent cut in interest rates is required.
Says Reiner Hoffmann, Deputy General Secretary of the ETUC: “It is not credible for European policy-makers to ask the United States to do something about the value of the dollar if, back home, the ECB is actually promoting a weak dollar by stubbornly keeping European interest rates much higher than US rates.”
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