— Will Fight For Stability Oriented Policy After Stark Departure

MARSEILLE (MNI) – There are no reasons to revise German growth
projections downward or launch fresh stimulus packages, European Central
Bank Governing Council member Jens Weidmann said Friday.

“The recent pessimism on economic growth is exaggerated. At the
current juncture, there are no reasons to consider fresh stimulus
packages,” Weidmann said during a press briefing following a meeting of
central bank governors and finance ministers from the Group of Seven
industrialized countries.

Weidmann noted that the recent economic slowdown was largely driven
by one-off factors such as previous oil price spikes, the natural
catastrophe in Japan and catch-up effects following an exceptionally
strong first quarter. “This slowdown in the second quarter was not
unexpected,” Weidmann noted.

The underlying trend remains positive — as reflected by recent
strong industrial production figures — and it continues to suggest
“robust growth” in the final quarter of 2011, he said. “I see no reason
to revise our growth forecast.”

Weidmann also tried to reassure markets that Eurozone banks are in
much better health than they were in 2009 and that ongoing
recapitalization efforts should further strengthen the system.

Weidmann gave assurances that the Bundesbank will continue to fight
for stability-oriented monetary policy in the Eurozone, after news of
Executive Board member Juergen Stark’s premature departure from the
central bank earlier Friday.

Weidmann said that he received news of Stark’s resignation with
“regret and respect,” especially in light of their shared
stability-oriented monetary policy orientation. “The Bundesbank will
continue to fight for stability oriented monetary policy,” Weidmann
promised.

Speaking at the same press briefing, German Finance Minister
Wolfgang Schaeuble said that Germany will propose a successor to Stark
“on time and quickly,” but he would not be drawn into speculation over
potential candidates.

“The policy of the ECB will not change as a result of Stark’s
departure,” Schaeuble said.

Turning to debates on the G7 level, Schaeuble said that policy
makers agreed that excessive public deficits are a key reason for
current economic and financial turbulence and that is “why fiscal
consolidation must be continued.”

Schaeuble also reiterated that Greece must meet all conditions set
under the EU/IMF program to receive the next aid tranche,

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

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