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13th Apr 2024

Sarkozy: Political pressure on ECB bears fruit

  • The Frankfurt-based bank decided to hold the central eurozone interest rate at 4 percent this month (Photo: ECB)

French president Nicolas Sarkozy has interpreted the decision by the European Central Bank not to raise its main interest rate this month as a "small result" of France's pressure against such monetary policy.

Speaking to journalists while on a visit to the French city of Mulhouse on Thursday (6 September), Mr Sarkozy said the ECB move shows that "talking about [interest rates] and raising the issue has yielded some small results," according to the AP news agency.

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The Frankfurt-based bank decided to hold the central eurozone interest rate at 4 percent, due to an "increase in uncertainty" in the financial markets following the recent sub-prime mortgage crisis in the US.

"Given this high level of uncertainty, it is appropriate to gather additional information and examine new data before deriving further conclusions for monetary policy," ECB president Jean-Claude Trichet said on Thursday, also hinting that no interest rate rise would follow in October.

Asked by journalists about a possible link between the bank's verdict and months of political pressure from Paris, Mr Trichet strongly denied that there was any, pointing to the golden principle of the bank's independence.

"Everybody knows that we are fiercely independent and there is not the slightest doubt that we decided in this, I would say, totally independent mode," he insisted.

He referred to the basic rules in the EU and 13-nation eurozone, saying "The treaty calls on executive branches in Europe not to seek to influence the central bank. Nobody thinks that we could be influenced, the world over."

Mr Sarkozy has repeatedly criticised the ECB for its monetary policy, something he started in earnest during his election campaign to become president.

Paris claims the eurozone interest rate hikes have had a negative effect on the growth of the French economy, saying the strong euro harms its exporters.

A few months after getting elected in May, the French president made an unprecedented visit by a head of state to the regular meeting of eurozone finance ministers in Brussels and called for a summit on economic policy, which would include a debate on governance of the monetary policy.

But other member states - particularly Germany – have strongly rebuffed any attempts to curb the independence of the bank.

The ECB has raised rates eight times over the past two years, arguing that it must keep a lid on the eurozone's inflation, fuelled by steady economic growth in the monetary union.

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