'Fully supports' ECB after German criticisms

Chancellor Angela Merkel said Thursday that she "fully supports" the independent policies of the European Central Bank, as she sought to downplay recent criticism of the body by fellow Germans.

"The ECB has a clear mandate, and that mandate is to ensure price stability," Merkel told reporters during a visit to the Dutch city of Eindhoven.

She (Munich: SOQ.MU - news) said that debate in Germany over eurozone interest rates "is legitimate and should not be taken as interference in the ECB's independent policies, which I fully support."

Last month, the ECB announced a range of new policy moves aimed at driving chronically weak inflation in the eurozone back up to economically healthier levels.

These included cutting interest rates to zero percent, beefing up the ECB's controversial asset purchase programme known as quantitative easing, and making vast amounts of cheap loans available to banks.

But the measures have increasingly come under fire in Germany where the country's many savers have seen their interest income cut due to the low rates while profits in the banking industry have also been squeezed.

German Finance Minister Wolfgang Schaeuble recently suggested the ECB's policies were contributing to political unrest in Germany and aiding the rise of an anti-euro, anti-immigrant AfD party.

Merkel stressed after Thursday's talks with Dutch Prime Minister Mark Rutte that "monetary policy can't resolve every issue".

"Therefore the responsibility lies with us as politicians to do our homework in economic policy, in innovation policies," she said.

"The better we do this, the quicker economic growth will occur and inflation will then certainly rise again."

ECB chief Mario Draghi insisted Thursday that the bank's policies "work, they're effective. Just give them time to fully display their effects".

Despite the ECB's latest round of rate cuts last month, eurozone inflation was stuck at zero percent in March, a long way off from the two percent figure that the ECB estimates would spur healthy economic growth.
Source: AFP