The European Central Bank has room to cut interest rates further, Executive Board member Peter Praet said on Tuesday, adding that the central bank is paying “great attention” to euro zone inflation, currently below its target.
The ECB cut its main refinancing rate to 0.5 percent and kept its deposit rate a zero at its May policy meeting, but said it stood ready to act again should economic conditions require more stimulus. It kept rates unchanged in June.
But annual euro zone inflation at 1.4 percent remains far below the ECB’s target of below, but close to two percent and Praet said the discussion about interest rates at the ECB was “very rich”.
“There is room for action in the standard measures,” Praet said in a question and answers session at the Frankfurt School of Finance. “The discussion about standard (measures) is quite rich and quite interesting.”
Praet said the inflation rate was “on the weak side” and the euro zoneeconomy was still in a fragile state, with growth risks to the downside.