Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Fans and players react online to Arsene Wegner's club departure

Read more

THE WORLD THIS WEEK

Syria alleged chemical attack: Gunfire delays deployment of weapons inspectors

Read more

FRANCE IN FOCUS

Cashing in on local French currencies

Read more

YOU ARE HERE

Life on the canals of northern France

Read more

INSIDE THE AMERICAS

What lies ahead for Cuba after the Castros?

Read more

#TECH 24

Discovering and harnessing the power of the sun

Read more

DOWN TO EARTH

Can France bid 'adieu' to popular weedkiller glyphosate?

Read more

#THE 51%

Harmful for your health: When gender bias affects medical diagnosis

Read more

REPORTERS

Africa’s donkeys slaughtered for Chinese ‘miracle elixir’

Read more

Business

ECB can cut its main rate a little more

Latest update : 2009-03-17

The European Central Bank (ECB) has said they still "have a little room for manœuvre to cut rates again". The ECB cut its main rate earlier this month to an all-time low as the 16-nation eurozone experiences its first recession ever.

AFP - The European Central Bank can cut its main interest rate a little below the historic rate of 1.5 percent but the ECB is nearing its lowest point, chief economist Juergen Stark said on Tuesday.

"We still have a little room for manoeuvre to cut rates again," Stark told the German daily Handelsblatt in an interview.

"But in my opinion, the floor is not far from where we are at the moment."

The ECB cut its main rate earlier this month to an all-time low as the 16-nation eurozone wallows in its first recession ever.

ECB President Jean-Claude Trichet also indicated then that the bank's main lending rate could be lowered further, but did not give a firm idea on when that might happen.

Several ECB directors have voiced reservations on taking the main rate too low, whereas the US Federal Reserve and Bank of Japan have cut their rates to essentially zero, and the Bank of England is very close, at 0.50 percent.

But Stark said that "despite a higher reference rate, eurozone financing conditions are more favourable than in Britain or the United States" in the medium and long term.

And in general, "with rates that are too low, we cannot reactivate the interbank market," Stark maintained, because "commercial banks will develop their activities only via the central bank."

Direct lending between commercial banks, crucial to getting money markets back on track, would remain restricted, he argued.
 

Date created : 2009-03-17

COMMENT(S)