FRANKFURT (AFX) - Bundesbank vice president Juergen Stark said the European Central Bank has emerged stronger and with its credibility enhanced after the public dispute at the IMF meeting over its refusal to cut interest rates.
Speaking in an interview with Boersen Zeiting, Stark said the ECB had been able to parry criticism from both politicians and the IMF that it should have followed the Federal Reserve in making rate cuts. "This was a test for the ECB that it has passed with flying colours," Stark said.
"The ECB has emerged strengthened from the rate dispute. It has gained respect, credibility and self confidence", Stark added. At the meeting, France's finance minister Laurent Fabius said the ECB's monetary policy must take into account the threat of a slowdown in growth, while IMF chief economist Michael Mussa said the ECB should have cut rates a month ago.
Stark said the ECB's insistence on keeping interest rates unchanged, when they have been cut by all other major central banks worldwide, has shown its independence from the Fed.
"The ECB is not a branch of the Fed. It comes to its own judgements from analysis and data, which it then has to answer for," he said. Stark reiterated that despite the growth slowdown in the euro zone this year there is no need for "hysterical reactions" on the part of central banks.