News Column

ECB Still Has Room to Cut Interest Rates

April 18, 2013
Euro on tightrope

Washington (dpa) - The European Central Bank (ECB) could still cut interest rates to spur growth in the recession-plagued eurozone, International Monetary Fund chief Christine Lagarde said Thursday.

"Of all the major central banks in the world, clearly the ECB is the one that still has room to manoeuvre," she said ahead of the IMF's spring meetings in Washington. "It will be for them independently to determine when is the right time to use that space and potentially reduce interest rates."

The bank's benchmark interest rate for the 17-member eurozone is now 0.75 per cent.

The US Federal Reserve, in comparison, dropped its key rate to near zero more than four years ago and has issued policy guidance suggesting it would maintain that level until unemployment declines significantly - likely for years to come - barring signs of inflation.

Furthermore, the Fed has undertaken a buying spree of government bonds, so-called quantitative easing, to push investment into the private sector, a monetary policy that amounts to printing money at a current rate of 85 billion dollars a month.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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