There’s still room to cut rates, says the ECB

Non-standard options include offering banks more long-term loans, stopping mopping up funds to offset the ECB’s bond purchases or reducing reserve requirements, he said.

While Asmussen said the ECB was watching money market rates closely, he also tempered expectations the eurozone’s central bank will ease more in the immediate future, saying its current stance is in line with developments.

“On standard measures, which are the interest rates, there is still some room,” Asmussen said.

“We also have the whole array of non-standard measures left, from the famous LTRO to using reserve requirements to discontinuing the weekly absorption operation.

“So there is a whole range that we could in theory do. No decision has been made yet.”

LTRO refers to offering banks long-term loans as the ECB did around the start of 2012, to give them funding security and encourage them to lend to households and businesses.

The ECB cut its interest rates to a record-low 0.5 per cent in May. Asmussen was said to have been the only Governing Council member to vote against the cut.

ECB President Mario Draghi said the central bank discussed cutting rates further in its last meeting on October 2, but decided to leave them unchanged.

Asmussen also said the ECB was keeping a close eye on the development of market interest rates.