ANKARA (Reuters) - Luxembourg Finance Minister Pierre Gramegna, whose country holds the rotating presidency of the European Union, said on Friday he was realistic about the prospect of interest rate hikes by the U.S. Federal Reserve.
“We cannot live all the time on easy money,” Gramegna told Reuters at a meeting of G20 finance ministers and central bank governors in the Turkish capital Ankara.
“The decision of the Fed will be influenced by many factors inside and outside the U.S. ... This G20 comes at a very good time because it gives the Fed an opportunity to gauge all the elements at stake,” he said.
“One has to be realistic that at one point in time the curve of interest rates will have to change.”
Gramegna also said the EU would welcome the inclusion of the Chinese yuan in the International Monetary Fund’s Special Drawing Rights (SDR) basket of currencies, provided Beijing meets a series of conditions.
“The EU would welcome if the renminbi would become part of the basket, if it meets the conditions. That exercise is being done by the IMF. There are technical conditions, legal ones that the IMF have been looking into and there are market conditions – one of them being how liquid the renminbi is,” he said.
“It is a fact that the renminbi has become a reserve currency in many ways ... so it is in the interest of the SDR, and the IMF, and the world, that this important currency finds its way into the SDR.”
Reporting by Jan Strupczewski; Writing by Nick Tattersall; Editing by Randall Palmer