January 12, 2016 / 2:38 PM / 3 years ago

ECB's Weidmann says low rates cut into bank sector profits

PARIS, Jan 12 (Reuters) - Europe’s exceptionally loose monetary policy is eating into bank sector profits, an unintended consequence of the European Central Bank’s attempts to kick start inflation, Bundesbank Chief Jens Weidmann said on Tuesday.

“In the short term, banks tend to profit from lower rates, as liabilities have shorter maturities than their assets, meaning refinancing costs will fall before interest rates do,” Weidmann told a conference. “But the longer the period of low interest rates continues, the more this eats into interest rate earnings.” (Reporting by Balazs Koranyi; Editing by Leigh Thomass)

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