Draghi Says ECB's Negative Rates Have Been a Success
13 October 2017 - 3:41AM
Dow Jones News
By Jason Douglas
WASHINGTON -- European Central Bank President Mario Draghi said
Thursday the central bank's negative interest-rate policies haven't
hurt bank profitability as critics suggested they would.
Mr. Draghi also reiterated the ECB's guidance that asset
purchases would continue until officials see a sustained
improvement in the outlook for inflation, and that interest rates
would remain at current levels "well past" the time it stops buying
assets.
In June 2014, the ECB moved the interest rate it pays to banks
that park money with it into negative territory, effectively
charging banks to leave cash on deposit. It subsequently cut it
three more times, to its current level of minus 0.4%.
Critics have called the move counterproductive as it could
squeeze bank profits, but Mr. Draghi said Thursday the
profitability of European banks has been increasing and is forecast
to increase further as the eurozone's economic recovery
continues.
"By and large our negative interest-rate policies have been a
success," Mr. Draghi said at the Peterson Institute for
International Economics. "We haven't seen the distortions that
people were foreseeing. We haven't seen bank profitability going
down; in fact it is going up."
He added the policy hasn't hurt money market-funds either,
another predicted consequence. The money flowing into such funds,
which park investors' money in cash and short-term debt securities,
has been increasing, Mr. Draghi said.
Mr. Draghi signaled in September that the bank probably would
announce plans for the future of its asset-purchase program after
its next policy meeting Oct. 26.
Write to Jason Douglas at jason.douglas@wsj.com
(END) Dow Jones Newswires
October 12, 2017 12:26 ET (16:26 GMT)
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