ECB can cut interest rates further if needed: Knot

FRANKFURT Thu Jul 12, 2012 10:10am EDT

FRANKFURT (Reuters) - There is nothing to stop the European Central Bank cutting its main interest rate below 0.75 percent if the euro zone's economy continues to deteriorate, ECB policymaker Klaas Knot said in a newspaper interview released on Thursday.

The ECB cut its main interest rate last week by a 1/4 point to a record low of 0.75 percent and reduced the deposit rate it pays banks for parking money with it overnight to zero in an effort to breathe life into the flagging euro zone economy.

"Should the situation deteriorate, there is no article of faith preventing us from going below 0.75 percent," Knot told the Financial Times Deutschland in an early release of an interview to run in its Friday edition.

"Currently, we regard 0.75 percent as appropriate," added Knot, a member of the ECB's policymaking Governing Council and chief of the Dutch national central bank.

Turning to the deposit rate, now at zero, he added: "We should learn from the experience of other countries with negative interest rates before we decide whether that is an option for us."

(Writing by Paul Carrel)

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