European Central Bank Official: Should Always Be Ready to Cut Rates Below Neutral

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On February 6th, as reported by the Financial Times, Eurozone rate-setters are urging economists to stop being overly fixated on the so-called neutral rate. They are warning that in a region that is increasingly being affected by weak growth and global uncertainty, this indicator "does not provide good guidance for borrowing costs." The Chief Economist of the European Central Bank, Lane, said that the ECB should be prepared to lower borrowing costs below neutral levels at any time in order to boost economic growth. "We should not limit our freedom of action due to a theoretical concept," he stated, adding that the ECB should maintain an "open mindset" regarding the final level of rates. (FXStreet)