Splits at the heart of the European Central Bank over last week’s rate cut have revived fears in Frankfurt of a German popular backlash against the bank’s policy making, even as the ECB faces decisions critical to the eurozone’s future.
People involved in policy debates said divisions between northern and southern representatives on the ECB board have been deepening since pressures on the eurozone have relaxed, with members freed up to revert to national interests.
Last week two German members of the ECB’s 23-strong governing council led a six-man revolt against Thursday’s move to cut the benchmark lending rate by 25 basis points. The cut was followed by public broadsides from Germany’s influential conservative economist Hans-Werner Sinn and some mainstream financial media.