PARIS (MNI) – Senior Federal Reserve officials assured other
central bankers over the weekend that the goal of their most recent
quantitative easing plan is not to devalue the dollar, European Central
Bank Governing Council member Christian Noyer said in an interview with
the French daily Le Figaro, which appeared on the paper’s Web site.
And, Noyer said, he has no reason not to believe the Fed’s
explanation.
The U.S. has been criticized across the globe in recent days for
the Federal Reserve’s decision last Wednesday to buy $600 billion worth
of Treasury securities in another round of quantitative easing popularly
known as QE2.
Officials from Brazil to China to Germany have taken the U.S. to
task over the move, saying the flood of extra dollars into the system
would not be welcome. Germany’s Finance Minister Wolfgang Schaeuble hit
the hardest, calling U.S. policymakers “clueless,” and saying it was
“inconsistent” for them to criticize China for maintaining its currency
artificially low while achieving the same thing by other means.
“We brought up the subject last weekend, in Basel, at the meeting
of the Bank for International Settlements,” Noyer, who is governor of
the Bank of France, said. “The leaders of the Fed explained to us how
they conceived of their action, in view of their mandate, their
objective of relaunching the American economy, and the risk of
deflation,” Noyer said. “They assured us that they had no deliberate
intention of making the dollar drop. And I have no reason not to believe
them.”
In any event, “it doesn’t all boil down to the dollar,” Noyer said.
He noted that there were some emerging market countries which, “failing
to accept sufficient flexibility of their exchange rate, have
ill-adapted monetary policies that create risks of inflation and for
growth.”
He insisted that despite divergences among central banks, nobody
wants to stray far from the path of policy consistency, and everyone is
“committed to ensure a framework for balanced growth — and that
commitment is still as strong as ever.”
Noyer added: “As the last G20 meeting of finance ministers and
central bank governors reaffirmed, nobody should or can manipulate their
currency.”
–Paris Newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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