ECB Praet Says CB Could Cut Rates

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.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza