November 20, 2019 / 10:02 AM / 22 days ago

ECB not close to reversal rate - de Guindos

FILE PHOTO: European Central Bank (ECB) Vice-President Luis de Guindos attends a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, September 12, 2019. REUTERS/Ralph Orlowski/File Photo

FRANKFURT (Reuters) - European Central Bank interest rates are not yet close to the so-called reversal rate, where low rates actually hamper the banking sector rather than stimulate lending, ECB Vice President Luis de Guindos said on Wednesday.

The negative side effects of the ECB’s ultra loose policy are nevertheless becoming more evident and require monitoring, de Guindos told a news conference.

The ECB cut its deposit rate to a record low minus 0.5% in September and markets see scope for a further cut next year even as lenders complain that ultra-low central bank rates hurt their earnings and may inhibit the flow of credit to the economy.

Reporting by Balazs Koranyi; Editing by Catherine Evans

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