|
 Coeure told Polish newspaper Gazeta Wyborcza in an interview
conducted on May 16 that if the uneven pace of the recovery was
confirmed and if the ECB saw a risk of inflation being too low for
too long, "we can take action in June".
"We can act in various ways, depending on the situation," Coeure was
quoted as saying, adding that interest rates "are low but they can
still go lower".
Cutting all three interest rates would imply pushing the rate on
overnight deposits, now at zero, into negative territory, which
would mean that banks would have to pay to park their money at the
central bank.
"Negative rates are one of the instruments available to us," Coeure
said, adding that the Governing Council had discussed such a step
extensively.
"We are technically and legally prepared for such a possibility. And
market participants are well aware that we are contemplating such a
move," he said.
Asked whether negative rates would discourage people from keeping
their money in banks, Coeure said that depended on how negative the
rates would be and indeed, rates that fell deep into negative
territory could have an impact on depositors.
"But a deposit rate slightly below zero does not necessarily imply
that depositors would be affected, while still providing incentives
for banks to lend more," he said.
[to top of second column] |
Coeure also said the ECB was keeping an eye on the euro exchange
rate and to what degree it was affecting inflation.
"And indeed, the strong euro is contributing to the current low
inflation. Consequently, any further strengthening of the euro
strengthens the case for more policy action by the ECB aimed at
bringing inflation closer to 2 percent," he said.
Asked about the risk of global currency wars, Coeure said: "As long
as the exchange rates are driven by the various countries' internal
situations and domestic monetary policy actions, this is not a
currency war but an adjustment of exchange rates to the current
policy, stemming from their economic developments," he said.
"This assumes, of course, that exchange rates will adapt in a
flexible way to the changes in economic conditions and monetary
policy."
(Reporting by Eva Taylor; Editing by Stephen Powell)
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