ECB Rate Hike Would Help Reduce German Current Account Surplus

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The German government believes an interest rate increase by the European Central Bank (ECB) would help to reduce Germany's often-criticised export surplus, the Funke Mediengruppe newspaper chain reported Wednesday. The newspaper cited an eight-page paper prepared by the German finance and economics ministries which Finance Minister Wolfgang Schaeuble plans to present at the spring meeting of the International Monetary Fund later this week, the International New York Times reported on a Reuters story. Schaeuble is a longtime critic of the ECB's current ultra-low interest rate policy. The new paper does not call for the ECB to raise interest rates, but said tighter monetary policy would be in line with European economic recovery and would reduce Germany's current account surplus due to an expected strengthening of the euro. "Economic growth in the eurozone and inflationary developments could spur the ECB to begin a normalisation of its monetary policy," the paper said, according to the media report. "A stronger euro would automatically reduce the trade surplus." Read more. (Subscription required.)