Economy

ECB Interest Rates Remain Securely Above Detrimental Level: Coeure, Reuters

FRANKFURT (Reuters) – Prolonged low interest rates from the European Central Bank (ECB) could potentially cause more harm than benefit, although current rates are safely above a problematic threshold, according to ECB Executive Board Member Benoit Coeure.

Coeure remarked that the existing state of financial intermediation indicates that the economic lower bound is well below the current deposit facility rate. He noted that the effects of negative rates, when combined with the asset purchase program and forward guidance, have had a clearly positive net impact.

However, he cautioned that maintaining very low interest rates for an extended period could have cumulative adverse effects on financial intermediation and overall financial stability. Coeure made these comments during a conference at the Yale School of Management in the United States.

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