The European Central Bank can ease policy further, if necessary, but there is little room for reducing interest rates, ECB Governing Council member Jozef Makuch said Tuesday.
The interest rate cut as a policy tool is almost exhausted and further reductions will have less effect, the policymaker, who heads the National Bank of Slovakia, said.
Going forward, interest rate cuts can only be seen a psychological tool, Makuch said.
The ECB announced a slew of stimulus measures for the euro area economy earlier this month that included a cut to all three of its interest rates and an expansion to its asset purchase programme.
The bank also announced a new round of longer-term refinancing operations and decided to include investment grade non-bank debt in its list of eligible assets for purchases.
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