ECB's Weidmann argues against preemptive rate cuts

WASHINGTON: Preemptively cutting interest rates would reduce the pressure needed to get euro zone politicians to tackle the region's debt crisis, European Central Bank Governing Council member Jens Weidmann said on Monday.

"With all our actions we set incentives for politicians. If I tell a politician, hey, take our balance sheet to leverage your assets, I can be sure that there will be no further measures."

"I don't want to comment on the SMP (ECB bond buy programme) but this also of course is one of the issues you have when you preemptively cut rates," Weidmann said during a question-and-answer session at an event organised by the American Council on Germany.

Weidmann, who also heads Germany's Bundesbank, also said he expected the German economy to record growth of 0.5 percent in the third quarter. It grew at 0.1 percent in the second quarter.

Copyright Reuters, 2011