Brussels, 29/11/2005 (Agence Europe) - At his meeting on Tuesday in Brussels with the economic and monetary committee of the EP chaired by the French socialist Pervenche Berès as President of the Eurogroup, Jean-Claude Juncker, the Luxembourg Prime Minister and Finance Minister, was in particular asked about the rumours about an imminent rise in interest rates from the European Central Bank (see EUROPE 9077). On other current dossiers, he said from the very beginning: “I will abstain from making any comment on the prospects for the financial perspectives”. On the Stability and Growth Pact, he said that he would apply the revised Pact “with all necessary rigour, with rigour not being a synonym of accomplished stupidity”, and said he was “convinced that the new German government will do all it can to completely respect the Pact by the end of 2007”. The Eurogroup wants to “amicably accompany” the German government's efforts: the Finance Minister has “one of the most difficult jobs”, and must be supported.
“The ECB, apparently, is preparing to shift interest rates upwards. The members of the Eurogroup think that this rise is not necessary (…). Are the prospects of inflation so worrying that a monetary decision needs to be taken now? Wage moderation, throughout the zone, is surprisingly sustainable, the underlying inflation is developing at a relatively moderate level, somewhere between 1.5 and 1.7%”¸ noted Mr Juncker, warning that our prospects for growth “still have elements of fragility”. But “if the ECB should deem it necessary” to increase interest rates on Thursday, then “I would draw the conclusion that it judges that the prospects for growth are so robust that they will not be threatened” by such a monetary decision, “I would see it as a sign of confidence in the economic recovery of the euro zone”, he declared. “The debate is not only monetary, it is also economic”, and we should be able to express an opinion “without people thinking that there's a war” between the ECB and the Eurogroup, said Mr Juncker at the same time, adding that “I am sometimes surprised by the virulence of those who think they need to remind me of the Bank's independence. As a co-author of the Treaty of Maastricht, I argued for the Bank's independence before others”. Mr Juncker (who warned in passing against a “rate-waltz”) pointed out that a few months ago the Member States put more pressure to Mr Trichet for him to lower interest rates, but that “I never joined that gang” because rates were already “historically low”.
During the debate, Mr Juncker had to respond to several MEPs who were rather worked up and aggressive, while the majority stressed his right to have his say on monetary issues as well. “Could a quarter of a point up or down threaten the small upturn forecast by certain optimistic oracles?”, asked Luxembourg Christian-democrat Astrid Lulling. “I have only seen these figures in the press. (…) Do you have more precise indications?”, replied Mr Juncker, repeating that if the ECB takes the decision, it means that it thinks that “this modest increase will not disturb the upturn”. And he insisted that “I have always defended the ECB's policy, which seems to me to be the right one. I have always been a friend to the ECB, and I will continue to be”. Mr Trichet, does not hesitate to give advice to governments on the subject of reform to budgetary policy, Mr Juncker pointed out. And the Danish social-democrat Poul Nyrup Rasmussen did not reproach him: “it is natural that the governor has his opinions on the European economy and that he declares them to the media, and it is also natural that the President of the Eurogroup has his own ideas on the subject of rates”. This opinion was not shared by German Christian-democrat Karsten Hoppenstedt, who went back on the attack and, quoting a headline from Tuesday's Frankfurter Allgemeine Zeitung (“Junckers Einmischungen”, or “Juncker gets involved”), shouted at Mr Juncker: what are you going to do to put out this fire? Mr Juncker's reaction was lively: this question really surprises me, should I tailor my behaviour according to headlines in German press? A few months ago, the FT Deutschland accused me of always having my “mouth stitched up”…. More calmly, the German liberal Wolf Klinz said that he had heard at a conference in Frankfurt with Mr Trichet, that the President of the ECB had received "relatively irate phone-calls from some heads of government" on the subject of the announced rate rise.
Mr Klinz also thought that the Eurogroup should, perhaps along with the ECB, regularly publish quantified data showing the advantages brought by belonging to the “euro club”. Although acknowledging that communication from the Eurogoup is difficult to organise because it is an “informal group”, Mr Juncker agreed, citing an example: without the euro, the increase in the price of oil would have meant an increase in petrol prices three times higher than it has been.