ECB rate cut won’t solve problem, says Liikanen

Date: Friday 06 Jul 2012

After the European Central Bank (ECB) decided yesterday to cut its benchmark interest rate from 1.0 per cent to a record low of 0.75 per cent, ECB governing council member Erkki Liikanen noted that it was an important move to support the Eurozone economy but that it shouldn’t be expected to save the day.

“It will take things in the right direction, although it won't solve the problem,” he said, adding that the “ECB is showing that it has tools and will use them”.

He also noted that lower inflation allowed the monetary authority to engage in this type of quantitative easing in order to “support economic activity”.

JM

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