BERLIN Nov 23 European Central Bank Executive
Board member Joerg Asmussen said on Saturday the ECB, which cut
interest rates to a record low earlier this month, was ready to
take further action if necessary and instruments at its disposal
included negative deposit rates.
The ECB slashed its main refinancing rate to 0.25 percent at
its meeting on November 7 after inflation in the single currency
bloc eased to 0.7 percent in October - well below the ECB's
target of close to but just below 2 percent for the euro zone.
"We will take further action if it is necessary to ensure
price stability in the whole of the euro zone," Asmussen said at
a conference organised by German newspaper Sueddeutsche Zeitung
A negative deposit interest rate was "theoretically a
possible instrument", he said, but added that he would be very
cautious in using this instrument.
"We discussed it in the ECB Governing Council meeting and
are technically in a position to do it but I've always said I'd
be very, very careful with this instrument," he said, adding
that he would not, however, rule it out in principle.
The ECB's president, Mario Draghi, raised the possibility
after the central bank's last policy-setting meeting of applying
negative rates but has since downplayed it.
Asmussen reiterated that the ECB would keep its monetary
policy expansionary for as long as necessary but he cautioned
against using non-standard measures for fear of making people
think that the ECB was more pessimistic about the single
currency bloc's situation than it actually was.
"We have a range of standard measures on the interest side
as well as non-standard measures that we can use if we need to."
"But I don't think it's sensible to fall into activism every
day as that would create the impression we consider the economic
situation in the euro zone to be worse than we actually do."
He also said monetary policy was no substitute for
structural reforms. German finance minister Wolfgang Schaeuble
said this week the European Central Bank's loose monetary policy
risked giving governments an incentive to slow their reforms.
Speaking at the same event, Deutsche Bank's
co-chief executive, Juergen Fitschen, warned about the
consequences of keeping interest rates low for too long.
He said he understood that monetary policy was currently
seen as an instrument that could generate growth and reduce the
financial burdens on countries but added: "Those who believe
they can solve problems with a sustained period of cheap money
cannot be helped."