ECB can cut rates further, Coeure says
FRANKFURT (Reuters) - The European Central Bank has room to cut its main interest rate further and would take policy action if it had a strong sense that inflation expectations were moving away from its target, ECB policymaker Benoit Coeure said.
Last week, the ECB left its main rate at a record low of 0.25 percent and underlined its determination to take action should euro zone inflation risk turning into deflation or rising money market rates threaten the bloc's fragile recovery.
"The MRO rate is at 25 basis points. There is room to cut it if needed, which is consistent with our forward guidance that rates will remain at their current level or lower," Coeure told news agency Bloomberg in an interview that ran Thursday.
The central bank could also cut its deposit rate - now at zero - into negative territory, he said.
"If we have a strong sense that anything impacts the medium-term scenario and moves our medium-term inflation expectation further away from 2 percent, then there would have to be a monetary policy reaction," he added.
(Reporting by Eva Taylor, writing by Paul Carrel)
