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Macron Calls for Rethink on ECB Approach to Monetary Policy

(Bloomberg) -- French President Emmanuel Macron called for a change in approach to monetary policy at the European Central Bank to boost the single market and protect it from the risks of financial crisis.

In an unusual move by a euro-zone leader to comment on the region’s central bank, Macron said in an interview with Les Echos the ECB needs to think differently if the European Union wants to capitalize on its strengths such as its domestic market and high savings rate.

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With the US dollar and Chinese yuan being used as economic weapons and growth stalling in Europe, “it seems to me that European monetary policy can be significantly adjusted today,” the daily quoted Macron as saying. “Reasserting the value of the European internal market means we can’t let inflation be our sole objective, but also growth and employment.”

Euro-zone leaders typically refrain from commenting on what the central bank should do, with policymakers fiercely defending the institution’s independence as key to its functioning. Bank of France Governor Francois Villeroy de Galhau, who is on the ECB Governing Council, has joined those strongly criticizing President Donald Trump’s attacks on the US Federal Reserve.

Unlike the Fed, which has a dual mandate for maximum employment and stable prices, the ECB focuses on inflation, with a target set at around 2% over the medium term. Macron has called previously for a widening of the criteria: in a speech ahead of European elections last year he suggested adding a growth goal and possibly another on decarbonization.

In Macron’s view, the ECB’s decision to continue selling government bonds risks pushing up long-term interest rates, slowing activity and strengthening the euro, according to Les Echo.

The ECB declined to comment on the interview. Its president, Christine Lagarde, called last month for more and smarter steps toward fostering European integration, reiterating that a truly single market would mean growth was no longer dependent on the decisions of others.

‘Financial Instability’

In the interview in which he called on China to act to reduce trade imbalances with the EU or face potential tariffs, Macron also pointed to financial risks from across the Atlantic.

“Growing US deregulation in crypto assets and stablecoins creates a non-negligible potential for financial instability,” he said. “Our monetary zone and financial players must continue to be protected. Europe must — and wants to — remain a zone of monetary stability and credible investment.”

Macron added that European debt is needed to provide “liquid, safe assets” that help boost the euro’s position among reserve currencies.