If the uneven pace of economic recovery in the euro area is confirmed and if we see a risk of inflation being too low for too long, we can take action in June. We can act in various ways, depending on the situation. At present, however, it is too early to say what exactly we’re going to do. A lot depends on the forthcoming economic data and on our staff growth and inflation projections, which are to be released in June. Your room for manoeuvre is limited as interest rates are already very low: the key rate is only 0.25%. They are low but they can still go lower. Are negative interest rates in the euro area possible? Negative rates are one of the instruments available to us. They have been discussed extensively by the Governing Council. We are technically and legally prepared for such a possibility. And market participants are well aware that we are contemplating such a move. Wouldn’t negative rates discourage people from keeping their money in banks? This depends on how negative they would be. Indeed, rates that fall deep into negative territory could have an impact on depositors. But a deposit rate slightly below zero does not necessarily imply that depositors would be affected, while still providing incentives for banks to lend more. In recent years, the ECB has used a number of non-standard monetary policy tools. It has purchased bonds on the market, pumped hundreds of billions of euro into the market in the form of cheap loans for banks.
2  BIS central bankers’ speeches