Brussels, 01/10/2007
To prevent a too expensive euro from pushing the euro area economy back into a slump in growth and jobs, the ECB must:
- Signal to exchange rate markets that excessive volatility of the euro will not be accepted,
- Rule out the possibility of interest rate hikes over coming months: higher interest rates in the euro area will attract more speculative capital and push the euro exchange rate even higher,
- Consider instead the option of cuts in euro area interest rates in order to support domestic demand,