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Otmar Issing
66, German
Why He Matters: He has a decisive influence on European interest rates
Location: Frankfurt, Germany
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Posted Sunday, Dec. 1, 2002; 15.43GMT
Issing is the man to watch if you're trying to figure out where European interest rates are headed. He came to the European Central Bank (E.C.B.), where he is chief economist, from the same job at the German central bank, which is obsessive about inflation. Never mind that few of Europe's economies at the moment seem prone to '70s-style inflation. The bottom line is that if Issing detects even a hint that inflation in the euro zone is getting out of control, the E.C.B. is likely to slam on the monetary brakes and raise rates, or at least not cut them, as some member nations are pressuring the bank to do. Somewhat scarily, the measure of money supply that Issing follows most closely is currently growing by more than 7% annually, far faster than the 4.5% growth the bank was expecting, but Issing seems decidedly relaxed about it. In an e-mail to TIME, he says the "prevailing uncertainty in financial markets" explains the increase and adds: "While more liquidity is available than would be needed to finance sustainable, non-inflationary growth, in the current economic environment there is no risk of this translating into inflationary pressure in the near future." You can be forgiven for thinking this is opaque language, but E.C.B. watchers translate such Delphic hints to mean a rate cut could be on the way.
Given his manner of speaking, it's not surprising that Issing's background is in academia, yet people who know him well say he has opened up since moving from the stiff Bundesbank in 1998. Francesco Giavazzi, an economics professor at Milan's Bocconi University who organized a meeting for professional E.C.B. watchers earlier this year, which Issing attended, describes him as a tough but open-minded pragmatist and says: "I have never seen him run away from a difficult discussion." Running is something Issing can do: a former sprinter and Bavarian senior athletic champion, he clocked 100 m in under 12 seconds at the age of 50.
But he doesn't seem fazed by the criticism that rains down on the E.C.B. "Being subject to criticism and close scrutiny, to my mind, is overall a healthy situation," he says. "I consider that the public would generally be ill-advised to put 'blind trust' in particular individuals or institutions" — including independent central banks.
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