LONDON/FRANKFURT — Central banks worldwide checked their ammunition Friday in preparation for turmoil from Greece’s election, with the European Central Bank hinting at an interest rate cut and Britain set to open its coffers.
Tensions were high about how to manage the eurozone’s debt crisis — epitomized by Greece’s bankruptcy and need for international aid — and a rare fight broke out between Germany and France, normally the glue that keeps the bloc together.
German Chancellor Angela Merkel criticized France’s economic performance, effectively taking a swipe at Socialist President Francois Hollande, who has called for more emphasis on economic growth and less on budget austerity.
“We must do everything possible to prevent the eurozone from falling apart,” Dutch Prime Minister Mark Rutte said on television.
ECB President Mario Draghi, one of many policymakers gearing up for trouble after Sunday’s vote in Greece, said his bank was ready to step in and fund any viable eurozone bank that gets in trouble.
He painted a picture of a deteriorating eurozone economy with no inflation danger — conditions for monetary easing.
“There are serious downside risks here,” Draghi told the annual ECB Watchers conference in Frankfurt, Germany, two days before the vote that could set Athens on a path out of the eurozone and stoke turmoil in financial markets.”This risk has to do mostly with the heightened uncertainty.”
Japan’s top financial diplomat, Takehiko Nakao, warned that his nation would respond as needed to unwelcome currency moves, a threat of intervention if investors seeking safety push the yen too high.
The Bank of England followed up on Thursday’s joint announcement with the government of a $155 billion offer of loans to banks by saying it will start next week with a charge of just 0.75 percent.
