LONDON, Feb 27 (Reuters) – The point at which interest rate cuts might start doing more damage than good is still not clear in the euro zone, one of the European Central Bank’s top policymakers Isabel Schnabel said on Thursday.
The ECB lowered its deposit rate to -0.5% in September last year and some economists argue it is now near a “reversal rate” point where cuts no longer have a beneficial impact on the economy.
“The concept of a reversal rate is useful and shows us if our tools impair the transmission mechanism,” of monetary policy Executive Board member Schnabel said in response to a question on whether the ECB was nearing that point.
“The reversal rate is not one number…It is moving all the time,” she said, adding that the ECB’s recent move to start tiering its rates more has created additional space. (Reporting by Dhara Ranasinghe; Editing by Marc Jones)
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