Guardian: Germany's Merkel says strong euro has advantages

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Germany's Merkel says strong euro has advantages

German Chancellor Angela Merkel said on Tuesday that the high level of the euro reflected the strength of the European economy and has advantages as well as disadvantages. "The strong euro is a sign of the strength of Europe. It has advantages and disadvantages. The disadvantages are talked about all the time," Merkel told reporters at a news conference. "The question is whether we should try to change the euro rate without regard to price stability. The answer to that is a clear no."

Said Merkel: "The ECB, whose main priority is fighting inflation,is the only major bank in major industrialized countries currently contemplating the possibility of increasing interest rates, even as worries persist about the fallout from the U.S. subprime lending crisis. The ECB's price stability policy is supported by us," Merkel stressed. She pointed to Germany's "firm rule that the European Central Bank's independence should not be called into question by any political pressure."

EU-Digest comment: Mrs. Merkel is right on target. The ECB is doing a great job and the way to fight inflation is not to reduce interest rates. Europe does not need the economic disaster the US is experiencing.