European Central Bank’s chief economist Peter Praet says interest rates could go ever lower

Speaking to the Italian newspaper La Repubblica, Praet said that rates are yet to reach their lower limit, reports CityAM.

“As other central banks have demonstrated, we have not reached the physical lower boundary,” he said.

Praet added that if “negative shocks should worsen the outlook or if financing conditions should not adjust in the direction and to the extent that is necessary to boost the economy and inflation, a rate reduction remains in our armoury.”

His view contrasts with that the ECB chief Mario Draghi who has  said he doesn’t expect further rate cuts.

Frankfurt recently upped its bond purchase programme from €60bn a month to €80bn and added corporate debt.

It also offered a new round of so-called targeted longer-term refinancing operations last week – cheap loans to from the ECB to banks that must be lent to the real economy.