ECB’s Lagarde: Negative Rates a ‘Crucial Element’ of ECB’s Policy Toolbox

21 June 2021

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Monday said that the ECB's negative interest rate policy was a ‘crucial’ part of its policy toolbox.

In a letter to a member of European Parliament published on the ECB’s website, Lagarde wrote that ‘[t]he negative interest rate policy continues to be an effective tool to support favourable financing conditions for the euro area economy.’

‘Cutting rates to below zero provides additional stimulus to the euro area economy, as rate cuts are passed through to bank lending rates and overall financing conditions for firms and households’, she said. ‘The ECB therefore considers the negative interest rate policy a crucial element of its set of policy instruments in the current circumstances.’