ECB analyzes negative rates
According to ECB chief economist Peter Praet there is currently a discussion in the ECB about negative interest rates. “Given the perspective of low rates for longer and the impact on the lending channel, this debate has been renewed, has come to the fore. It is something we have to analyze seriously. For tiering we need to be convinced that it would address a monetary policy question in an efficient way. Work is being done at the staff level,” Praet said in an interview with Bloomberg.
As early as Wednesday, ECB President Mario Draghi announced that the central bank might reconsider its approach to negative interest rates: “If necessary, we need to reflect on possible measures that can preserve the favorable implications of negative rates for the economy, while mitigating the side effects, if any.” But Draghi underlined that low bank profitability is not an inevitable consequence of negative rates. Bloomberg (Praet), Bloomberg (Draghi)
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