Euro-zone interest rates 'appropriate', KL meet told


  • Nation
  • Thursday, 14 Jul 2005

KUALA LUMPUR: Current euro-zone interest rates are right for the region's economic development, a European Commission official said Thursday. 

"In my view, the current interest rate level is appropriate for our economic development," Klaus Regling, director general of economic and financial affairs for the European Commission, said during the "Euro Conference on Expanding Asean-EU Economic Links: The Role of the Euro." 

The European Central Bank has kept its key interest rate unchanged at 2% for the 12 nations that use the euro currency since June 2003. 

But it has faced increasing calls to cut rates to stimulate the economy against a background of sluggish economic growth. 

Lower rates can help create jobs, and boost growth and stock markets in the short term, but they also can fuel corrosive inflation down the road. 

"In both real and nominal terms, both credit and monetary expansion are strong. The credit available is sufficient to support monetary activity," Regling said,explaining why interest rates should stay low. 

Europe's disappointing economic growth is not the result of macro-economic factors, he said, but because of insufficient speed in implementing structural reforms. 

The European Commission is the executive body of the European Union. - AP 

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