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Sarkozy questions if ECB rate increase was ‘reasonable’

French President Nicolas Sarkozy recommenced his criticism of the European Central Bank (ECB) on Saturday, asking it was “reasonable”’ for it to have raised the region’s key interest rate this past week.

The ECB lifted its main interest rate on Thursday to a seven-year high of 4.25 percent in hope of putting a lid on record inflation, which has hit a 16 year high in the 15 nations that use the euro.

Sarkozy, who has repeatedly attacked the Frankfurt-based bank for focusing too much on inflation and not enough on growth, asked delegates at a Paris meeting of his Union for a Popular Movement (UMP) party “if it was reasonable to raise rates, while the Americans have rates at 2 percent.”

“I was among those who voted for independence of the ECB, I don’t regret it,” Sarkozy told the meeting of his UMP in Paris.

“I was among those who voted for independence of the euro, I don’t regret that,” he said.

“But all the same, without compromising everything I believe in, I have the right as president of the French republic to wonder if it is reasonable to raise the European rates to 4.25 percent,” Sarkozy said.

The US Federal Reserve has cut its key rate seven times since last September to 2 percent in a bid to avert recession, while the ECB left its unchanged until the past week amid surging consumer prices.

Sarkozy’s comments carry greater weight after France on July 1 became the president of the 27-nation EU, meaning it will help shape the EU’s agenda and policies for the rest of this year.

ECB President Jean-Claude Trichet has brushed aside the criticism, telling reporters on Thursday that his central bank is “an independent institution.”

Sarkozy repeated his call for the G8 nations to increase its ranks to include China and India. He and other leaders from the group are scheduled to meet in this week for their annual summit, this year in Japan.

“It’s not reasonable to continue to meet as eight to solve the big questions of the world,” he said.
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