Thursday February 12, 07:05 PM
Gonzalez-Paramo-ECB interest rates can go lower
BARCELONA, Feb 12 (Reuters) - The European Central Bank could cut interest rates lower than their current 2.0 percent, but dropping them to very low levels could cause problems, ECB Executive Board member Jose Manuel Gonzalez-Paramo (Stuttgart: 896541 - news) said on Thursday.
'Two percent is not the lowest interest rates can go,' Gonzalez-Paramo told reporters.
At the same time he added his voice to the band of ECB members warning against cutting rates too low.
'There are interest rate levels that cause more difficulties than the problems they help to solve,' he said. 'Certain very low levels of interest rates make it difficult to get out of that anomalous situation.'
The ECB held rates at 2.0 percent at its February meeting but policymakers including Guy Quaden, Miguel Angel Fernandez Ordonez, Lucas Papademos, Juergen Stark and Gertrude Tumpel-Gugerell have signalled a cut is likely in March.
The comments have cemented market expectations that the central bank will cut rates by 50 basis points to a record low of 1.5 percent in March.
(Reporting by Jason Webb, writing by Marc Jones) Keywords: ECB/GONZALEZ PARAMO
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