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

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam