Report
What will the ECB do if it starts taking into account the negative effects of very low interest rates?
The list of negative effects of very low interest rates in the euro zone is very long. What can the ECB do if it comes to believe that very low and negative interest rates are bad for the euro zone? It should stop cutting its key interest rates; It cannot resume quantitative easing, as this would drive down long-term interest rates; I t cannot use very long-term repos (TLTRO) with favourable conditions, as this would drive down interest rates on bank loans; The only remaining possibility for the ECB would be to buy risky assets on which risk premia remain very high, such as equities.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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