Key takeaways from Praet interview

After European Central Bank (ECB) decided to stay put this month, executive board member, Peter Praet laid out on 25th April, what may lie ahead of the central bank, in an interview with Daniel Badía González and Agustín Monzón Peña, which is published today in ECB website.

Here is the link to full interview - https://www.ecb.europa.eu/press/inter/date/2016/html/sp160429.en.html

Those, who don’t have the time to go through the whole, can go through our key highlights below –

• Mr. Praet, affirmed Mario Draghi’s view that negative rates do have a limit, maybe to a point. Where costs associated outweighs benefits. He mentioned there are still rooms to cut further but that may not be needed in near future. It will require significant worsening of inflation outlook to pull that trigger.

• Helicopter money is out.

• Defended negative rates over criticism, especially from banks as it improves economy, increase loan demand and improve loan quality.

• ECB to be more focused towards implementation of the measures announced, instead of new measures. TLTROs and corporate purchases are yet to kick in.

• Openness to bigger QE if required and expects all to benefit from corporate and government QE, despite ECB itself buying securities of the few.