Euro rise could hurt Europe: Deutsche CEO

By Mike Dolan

LONDON (Reuters) - The euro's steep rise against the U.S. dollar is nearing levels that will hurt European businesses and complicate the European Central Bank's monetary policy, Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) Chief Executive Josef Ackermann said on Thursday at the Reuters Finance Summit.

Ackermann was speaking a day after the euro soared to a record high of $1.4730, well above equivalent records set by Germany's mark in 1995. He spoke as the European Central Bank met to decide its latest interest rate decision.

"I think we are getting close to a level where European business is really feeling the pinch," Ackermann said. "Then of course it will be very difficult for the European Central Bank to stick to a completely stability-oriented monetary policy."

Ackermann said he thought it was best that the ECB remain "disciplined for as long as they can" and that they seemed to be intent on that course for now.

But he said that although the rising euro partly offset the effect on Europe's businesses of a parallel surge in world oil prices, he expected pressure on the central bank to alter its course would be intense.

"The European Central Bank...still sees inflationary pressure on the horizon and therefore will probably be very much inclined to raise interest rates," he added.

"But on the other hand the euro getting stronger and stronger will put them under tremendous political pressure and also under business pressure."

The ECB is widely expected to keep its key interest rates on hold again at 4.0 percent on Thursday, having at least postponed a widely flagged rate rise in September due the intense credit squeeze that emerged in August.  Continued...