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Opinion

We’re not listening

       
Wim Duisenberg

It's been another bad month for the European Central Bank, with everyone telling it what to do. Horst Köhler of the IMF said the ECB would have to cut rates to prevent the US recession from spreading. US finance minister Paul O'Neill agreed, and at a meeting in Malmö in Sweden, so did European finance ministers.


ECB president Wim Duisenberg replied saying he "heard, but didn't listen" to those demands. So interest rates were left unchanged at 4.75% on the meetings on April 11 and 26 - against analysts' predictions of a 25 basis point cut.


Duisenberg's remark might be seen as the latest in a line of diplomatic gaffes. But this time he has a point. Even if he did agree on the need to cut rates to counter economic slowdown, he could hardly act on it. The ECB has a clear mandate, as stipulated in the Maastricht treaty, to deliver stable prices.



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