By Michael Nienaber
BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble called on Tuesday for urgent structural reforms to spur growth to end the era of low interest rates, a day before lawmakers will grill ECB President Mario Draghi about his loose monetary policy.
His comments reflect a return of tensions between Europe's largest economy and the euro zone's central bank, which has cut rates aggressively in recent years and pumped over a trillion euros into the economy through asset purchases.
But with growth in the 19-member bloc still being mediocre and inflation barely above zero, well short of its target of nearly 2 percent, the ECB has little to show for its efforts and critics argue its monetary policy has reached its limits.
In a guest article published in Germany's staunchly conservative Frankfurter Allgemeine Zeitung newspaper, Schaeuble said interest rates were too low and a cause of serious and legitimate concern.
"We'll only be able to leave this low-interest phase behind us if we have more sustainable growth in Europe," Schaeuble said. "We won't achieve this if we continue to walk on old paths with new money, but only if we change course."
More structural reforms are needed in Europe and governments must start reducing their "unbearably high debts" in order to become more resilient against external shocks, Schaeuble said.
Gunther Krichbaum, the head of the parliamentary European affairs committee who invited Draghi to Berlin to explain his policy to lawmakers on Wednesday, told Reuters that the Italian central banker should expect a frank discussion.
"We're parliamentarians, not diplomats. Of course there'll be critical questions, but Draghi can handle this," Krichbaum said, adding lawmakers would ask him about the ECB's bond purchase program and the health of Italy's banking sector.
Krichbaum said the ECB's monetary policy was actually like an invisible bailout for the indebted countries of southern Europe and that this was never authorized by parliaments.
"Of course, the ECB is independent. But with its current monetary policy, the ECB under Draghi is going quite actively to the limits of its mandate," Krichbaum added.
German government officials have repeatedly complained that the ECB's monetary policy is eroding the savings of thrifty Germans and hurting profit margins for banks.
In spring, Schaeuble even blamed the ECB's policies for the rise of the right-wing Alternative for Germany (AfD) which was founded in 2013 in opposition to euro zone bailouts and has since morphed into an anti-immigration party.
(Reporting by Michael Nienaber; Editing by Alison Williams)