April 16, 2014 / 7:24 PM / 5 years ago

French economy minister urges talks over euro strength

PARIS (Reuters) - France wants euro zone countries to meet soon in order to discuss the euro’s strength and monetary policy, French Economy Minister Arnaud Montebourg said in a newspaper interview.

French Economy Minister Arnaud Montebourg leaves after the second cabinet meeting of the new government at the Elysee Palace in Paris, April 9, 2014. REUTERS/Benoit Tessier

The outspoken minister also called on the European Central Bank to weaken the euro, urging it to adopt unconventional policies at its next rate-setting meeting in May.

“The euro’s strength is ... a political subject. We want our European partners to meet soon to discuss this subject,” Montebourg said in the interview published on Les Echos business daily’s website on Wednesday.

“The euro needs to come down, (and) a new monetary policy that is not restrictive anymore is needed, based on the model of the American Fed,” he added.

Montebourg, one of the most leftist members of President Francois Hollande’s Socialist government, is a frequent critic of the ECB, which he considers has not done enough to support growth in the euro zone.

ECB President Mario Draghi said at the weekend that further strengthening of the euro could trigger more monetary easing.

ECB officials are increasingly concerned that the euro’s strength is weighing on inflation, which in March reached its lowest level since November 2009 with a reading of 0.5 percent, far below the ECB’s target of close to but less than 2 percent.

The euro is already up nearly 5.5 percent against the dollar over the past year at around $1.38. Although it makes imports cheaper, weighing on inflation, a strong euro hurts exports by making them less competitive on international markets, much to the consternation of French politicians.

“Mario Draghi, whose remarks last weekend have to be welcomed, must take action and force the euro’s exchange rate lower,” Montebourg said.

“We expect a decision at the ECB’s next meeting in early May. Unconventional policy is the solution to our problems,” he added.

Reporting by Leigh Thomas; Editing by Alison Williams

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