FRANKFURT, June 19 — European Commission President Jean-Claude Juncker today defended the European Central Bank, after US President Donald Trump attacked the institution with claims of currency manipulation.
“It’s so unfair to attack central banks when it comes to their independence,” Juncker told a central banking conference in Sintra.
Trump had yesterday said it was “unfair” to the US that ECB chief Mario Draghi dangled the prospect of lower interest rates or other stimulus for the eurozone economy, sending the single currency sliding against the dollar and boosting European markets.
A weaker euro makes exported European goods cheaper, which Trump said was “making it unfairly easier for them to compete against the USA”.
Draghi responded the ECB “doesn’t target the exchange rate” but only its price stability target of inflation just below 2.0 per cent, and inflation has recently slowed further below that level.
Juncker added that “one of the great powers and responsibilities of being a central banker is that you can move markets with a single line in a speech.”
Trump has made perceived unfairness to America in the international trading system a core focus of his presidency and claimed credit for a strong economy.
That has frequently brought central bankers including US Federal Reserve chief Jerome Powell into his sights.
The president said yesterday he had been denied a “level playing field” with Europe as the American central bank raised interest rates in recent years while the ECB kept monetary policy loose.
“Let’s see what he does,” Trump said when asked if he was planning to remove Powell from the top position.
Market watchers expect the Fed to indicate at its meeting today that an upcoming move in interest rates could be downward, faced with weakening economic indicators.
But Trump’s interventions could make it harder for the central bank to budge, as it looks to signal its freedom from political interference. — AFP
