PARIS (Reuters) - Negative interest rates have been an effective monetary policy tool for the European Central Bank and there is no reason to change its guidance on their use, Executive Board member Benoit Coeure said on Tuesday.
Hoping to revive inflation and growth after fighting off the threat of deflation, the ECB has set base interest rates below zero and is buying 60 billion euros worth of bonds each month - a policy approach it has said it will maintain at least until the end of this year.
“When interest rates are negative some people complain, we think that it clearly contributed overall to the effectiveness of monetary policy,” Coeure told a conference at the Paris School of Economics, reiterating comments made to Reuters last week.
“Our current analysis of the secondary effects of negative rates suggest that there is no reason to change the indications we’ve given,” he added.
The ECB currently charges banks 0.4 percent on their excess cash, an extreme policy tool known as a negative Deposit Facility Rate.
Negative interest rates are supposed to discourage banks from parking spare cash at the ECB in order to get them lending to the broader economy. However, some banks in Germany have suggested that it actually discourages lending.
Coeure told Reuters in an interview last week that the future path for interest rates was “not set in stone”.
Reporting by Leigh Thomas and Myriam Rivet; Editing by Geert De Clercq