May 14, 2018 / 6:15 PM / 5 months ago

ECB says the excess cash it created could backfire - Coeure

FRANKFURT (Reuters) - The excess cash that the European Central Bank has created with its bond purchases could hurt its monetary policy in the future by artificially limiting the movement of some interest rates, ECB board member Benoit Coeure said on Monday.

FILE PHOTO: Benoit Coeure, board member of the European Central Bank (ECB), is photographed during an interview with Reuters journalists at the ECB headquarters in Frankfurt, Germany, May 17, 2017. REUTERS/Kai Pfaffenbach/File Photo

“With our reinvestment policy ensuring continued excess reserves, there is a risk that, under the current framework, some short-term market rates would not respond fully to changes in our key interest rates or, even if they would, that a continued dispersion of short-term rates would adversely impact the transmission of our monetary policy stance,” Coeure said.

But any such concern is for the longer term as the ECB expects its key policy rates to remain at their present levels for an extended period of time, Coeure said in Geneva, repeating the bank’s long-standing policy message.

Reporting by Balazs Koranyi; Editing by Francesco Canepa

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