FRANKFURT (Reuters) - Germany’s top financial lobbies criticised Thursday’s rate cuts by the European Central Bank, saying they hurt savers without bringing economic benefits, while the new ECB scheme to buy asset-backed securities to free up lending was also unhelpful.
“Further rate cuts cannot boost credit creation, nor are they appropriate given the low rate of inflation,” the head of insurance lobby GDV, Alexander Erdland, said in a statement.
Earlier on Thursday, the ECB cut interest rates to a record low, unexpectedly bringing borrowing costs close to zero to lift inflation and support the stagnating euro zone economy.
The central bank will also seek to unlock lending by buying asset-backed securities and euro-denominated covered bonds from October.
“Instead of taking more monetary measures to ensure the low-interest rate environment in the euro zone, more sustainable structural reforms must come into focus,” Erdland said.
Germany’s corporate banking lobby BDB said the cuts would provide little benefit but posed dangers.
“The ECB’s actions increase the danger that urgently needed economic reforms in several euro countries will be postponed,” the federation’s head Michael Kemmer said in a statement.
The country’s powerful cooperative banking lobby BVR called the cuts premature and “very questionable”, saying the ECB was removing incentives for people to save for retirement.
Kemmer further criticized the asset purchase plan saying weak credit creation was largely a result of weak demand for new loans, not banks’ inability to lend.
“The ABS programme does not help,” he said. “Without further economic reforms, especially in Italy and France, the euro zone risks slipping into long-term stagnation.”
Reporting by Thomas Atkins; editing by Keiron Henderson