FRANKFURT, Jun 23 – A leading member of the European Central Bank hinted on Tuesday that its current cycle of sharp interest rate cuts was over, saying its efforts so far made further measures unnecessary.
The bank has slashed its reference rate to a record low of 1.0 percent, provided commercial banks with unlimited euro loans and is set to buy low-risk bonds to boost the corporate lending market.
"With this broad package of measures, the eurozone\’s financial system can deal with exceptional challenges posed by the crisis," said Axel Weber, a prominent member of the bank\’s governing council.
"It is not necessary" to take further measures now, added Weber, who is also head of the German central bank, according to the text of a speech delivered in the southern city of Munich.
Since early October, when the ECB\’s reference rate was 4.25 percent, the bank "has used margins of manoeuvre that resulted from a decrease in inflation risks and a dramatic deterioration of the economy to cut rates" and give "a considerable boost" to business activity, Weber said.
Many economists expect the ECB rate to remain at 1.0 percent for some time owing to signs the eurozone recession is easing and because the effects of huge government stimulus plans should begin to appear in the coming months.