Comments by ECB chief economist, Peter Praet
- There needs to be a solid monetary policy case before officials act to mitigate the side effects of negative rates on banks
- ECB staff are examining the issue of tiered rates but the action isn't a done deal
- Doesn't see a particular problem with the economy and current lending channels
- But with the weakening economy, it may happen in the future
European banking stocks got a relief yesterday when a report floated about that the ECB was studying tiered deposit rates to help alleviate pressures faced by regional banks as a result of the central bank's negative rates. So, basically Praet's comments here is tempering with the optimism overnight as he notes that 'there isn't a particular problem' with lending channels at this point in time.
That said, the fact that they're looking into it may keep giving hope to banks that they could pursue such an option if economic conditions continue to dwindle further this year.
