ECB's de Cos: Prolonged period of low interest rates could threaten financial stability

Author: Justin Low | Category: Central Banks

Comments by ECB governing council member, Pablo Hernandez de Cos

  • September stimulus package is to support reaching inflation objective
  • But maintaining low interest rates for longer could hurt banking transmission channels of our monetary policy
I think that is the real dilemma faced by the ECB at the moment and why deepening negative rates next year may be a bit troublesome.

Much like Japan, the squeeze will be on the banks but considering how fragile the banking sector is in Europe - especially in periphery nations like Italy and Spain - it presents a real problem if there is a real threat of them going belly up.

By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose