More from Lane: - Q: How do you respond to......>

ECB: More from Lane:

- Q: How do you respond to the accusation from Germany that you are mixing

fiscal and monetary policy and overstepping your powers?

- A: Monetary policy acts on interest rates and, by doing so, it always has

implications for the financing conditions of all sectors in the economy: firms,

households and also governments. What the Treaty explicitly rules out is that we

directly finance governments, in other words that we conduct monetary financing.

But we are careful to remain at a good distance from that, and this has also

been confirmed by the court rulings. It is important to recognise that inflation

has been very low, and we have had to implement expansionary monetary policy

measures to lift it to levels that are closer to our inflation aim. Let us also

not forget that in the past, in different circumstances, the ECB has had to take

decisions that were not universally popular, including with governments, such as

raising interest rates. So our independence is crucial if we are to fulfil our

mandate.