The ECB left interest rates unchanged at a record low of 0.25
percent at its March policy meeting last week and unveiled no other
measures to bolster a fragile euro zone recovery despite forecasting
low inflation for years to come.
"We have room left to act," Lautenschlaeger said in her first
interview since taking the job on the ECB top board in January,
having been vice president of Germany's Bundesbank.
"The deposit rate could be negative, for example. That's at least a
possibility depending on whether the underlying factors we observe
would call for this sort of measure," she said.
Cutting the rate below its current level of zero would mean charging
banks for parking their deposits at the ECB overnight, in the hope
they would instead lend some of the money to firms and consumers.
The ECB could also suspend its weekly withdrawal of money it spent
on Greek and other government's bond during the debt crisis, launch
another long-term refinancing operation "with a more targeted
approach" or tweak its collateral framework.
"We will act should we observe rising concerns about medium-term
price stability," Lautenschlaeger said, adding that inflation
expectations were firmly anchored in the medium term and that there
had been no reason to act last Thursday.
"The output gap we acknowledge by our forward guidance: Interest
rates will remain at the present level, or even lower, over a longer
period of time and well into the recovery," she said.
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Having worked at the Bundesbank, which opposed the ECB's
yet-to-be-used government bond purchase program, dubbed OMT,
Lautenschlaeger was asked for her own position on the matter.
"Overall, I am a little bit critical about the incentives structure
offered by the OMT. I do see some legal questions coming up."
Turning to plans to revive the asset backed securities market,
Lautenschlaeger said she would ask the Basel Committee and the
Financial Stability Board to revisit a decision to strengthen
capital requirements for ABS to check whether these "are justified
or too high".
To read the full interview, click on:
(Reporting by Eva Taylor)
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