ECB Will Not Take Rates to ‘Absurdly’ Negative Levels – Coeure

The European Central Bank will not move interest rates into “absurdly” negative territory and negative rates are not the bank’s main policy instrument even if further cuts can not be ruled out, Executive Board Member Benoit Coeure told Politico.

Although negative rates could reduce banks’ profitability, lenders actually increased their interest margins last year when the deposit rate was already negative and banks should feel reassured by the ECB’s latest moves, Coeure was quoted on Wednesday by Politico as saying.

The ECB unveiled an unexpectedly large stimulus package this month, cutting its deposit rate deeper into negative territory, increasing monthly asset buys by a third and offering free loans to the corporate sector to boost growth.

Reuters

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.