Ministers call for restraint on euro interest rates

Eurozone finance ministers have urged the European Central Bank to delay increasing interest rates to protect the EU’s fragile economy.

Meeting on Monday night, the eurozone ministers told ECB president Jean-Claude Trichet that there was no need for a rate rise as high oil costs had as yet had no major impact on consumer prices.

Trichet has warned that the ECB would not hesitate to increase interest rates to keep eurozone inflation on track for its 2 per cent target.

The latest estimates from Eurostat put eurozone inflation at 2.5 per cent, but the ministers argued that core inflation, excluding energy costs, is just 1.5 per cent, well within the ECB’s target range.

The eurogroup ministers, led by Luxembourg Prime Minister Jean-Claude Juncker, want the ECB board to listen more carefully to their views before making interest rate decisions, but have no power to tell the bank what to do.

“The idea is that the ECB should listen to what ministers have to say and to take decisions after listening to the debate,” Juncker’s spokesman told FT Europe.

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