BERLIN, April 14 - European Central Bank governing council member Ernst Welteke was quoted on Monday as brushing aside an International Monetary Fund call for the central bank to cut interest rates. "It's the old saying: the harder you beat central bankers the thicker we get. We will set our monetary policy independently from what the International Monetary Fund or others tell us," Welteke was quoted as telling Handelsblatt newspaper on the margins the weekend's IMF spring meeting in Washington. Welteke noted the ECB had already cut interest rates twice in the past four months, moves that would take time to have an impact.
"Germany has never had central bank interest rates as low as at the moment," Welteke was quoted as saying. IMF chief Horst Koehler said in a French newspaper interview last Friday that there was a risk of deflation in countries like Germany and that the ECB could and should cut interest rates if advance indicators on economic growth pointed to continued deterioration. The ECB's key lending rate is currently 2.50 percent, equalling a level last reached in spring 1999 following the Russian financial crisis. Welteke was also quoted by Handelsblatt defending the bank's two percent tolerance ceiling on inflation against the IMF's call for the ECB to change its inflation target to 2.5 percent. Welteke noted the current target had stabilised market expectations of inflation at under two percent. "That is a huge achievement," he was quoted as saying.//