BERLIN (Reuters) - Germany prefers a stronger euro and higher interest rates in the single currency bloc, Deputy Finance Minister Jens Spahn said, responding to claims by the United States that Europe’s largest economy was exploiting the exchange rate to boost trade.
“When one considers only the German economic situation, the euro is too weak at the moment and the rates are also too low,” Spahn said in an interview with public broadcaster ZDF to be aired on Thursday.
The European Central Bank (ECB) has been buying bonds, holding rates in negative territory and giving banks free loans to fight anaemic growth and inflation. Its expansionary policy has been criticized by some German politicians, notably Finance Minister Wolfgang Schaeuble.
“That’s why we are saying: a smart start to reversing this low interest rate policy would be desirable from a German perspective,” Spahn said. “But we have to wait, how the ECB, as an independent central bank handles this”.
Peter Navarro, U.S. President Donald Trump’s top trade adviser, last month accused Germany of using a “grossly undervalued” euro to gain a competitive advantage over the United States and its European Union partners.
Chancellor Angela Merkel rejected the criticism, saying the ECB sets monetary policy in the 19-member euro zone.
“One thing is clear: the value of the euro, as well as the interest rates in Europe will not be influenced by Germany. The U.S. is accusing us of wanting to keep the rates artificially low. The government has nothing against rising rates,” Spahn said.
Merkel on Thursday held behind-closed-doors talks with ECB chief Mario Draghi.
Reporting by Joseph Nasr and Michael Nienaber