May 14, 2018 / 6:06 PM / a year ago

ECB says the excess cash it created could backfire: Coeure

FRANKFURT, May 14 (Reuters) - The excess cash that the European Central Bank has created with its bond purchases could hurt its monetary policy in the future by artificially limiting the movement of some interest rates, ECB board member Benoit Coeure said on Monday.

“With our reinvestment policy ensuring continued excess reserves, there is a risk that, under the current framework, some short-term market rates would not respond fully to changes in our key interest rates or, even if they would, that a continued dispersion of short-term rates would adversely impact the transmission of our monetary policy stance,” Coeure said.

But any such concern is for the longer term as the ECB expects its key policy rates to remain at their present levels for an extended period of time, Coeure said in Geneva, repeating the bank’s long-standing policy message. (Reporting by Balazs Koranyi Editing by Francesco Canepa)

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