FRANKFURT, Aug 26 (Reuters) - The European Central Bank’s experiment with negative interest rate has been successful, even if unwanted side effects grow over time, ECB board member Isabel Schnabel said on Wednesday.
Although the ECB’s deposit rate is at a record low of minus 0.5%, Schnabel said this is not the effective lower limit for rates, in part because the ECB introduced a “dual rate” structure by providing compensation to banks for the punitive charges related to negative rates.
“There is considerable uncertainty as to the precise level of the ‘reversal rate’ and current estimates suggest that the ECB has not reached the effective lower bound,” Schnabel said in a speech. (Reporting by Balazs Koranyi; Editing by Jon Boyle)
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