FRANKFURT (AFX) - One of Germany's five economic wise men, Horst Siebert, said the European Central Bank should not follow the Federal Reserve in cutting interest rates and is best advised to keep its rates on hold for the moment.
Siebert, who chairs the Kiel Institute for Economic Research, sits on the 'wise men' panel of the five economists who provide the government with independent advice.
Speaking in an interview to the Morgenmagazin on German television today, Siebert said he does not expect a rate cut from the ECB in the near future.
The Federal Reserve is widely expected to cut US rates by 0.25 pct tonight, its seventh cut this year. On the other hand economists are divided on whether the ECB will cut rates at its next meeting on August 30.
Siebert said the ECB, as a young central bank, cannot "act in the same way as (Federal Reserve chairman Alan) Greenspan." He said the ECB is "well advised" to wait for the effects of the last ECB interest rate cuts to feed through to Germany.
The German government is currently not in a position to do much to avert the downturn, Siebert said. He said the government should take a long term view and not be "fixated by the economy".