February 10, 2017 / 10:07 AM / a year ago

ECB should drop reference to lower rates in guidance: Mersch

FRANKFURT, Feb 10 (Reuters) - The European Central Bank should drop its reference to possible rates cuts from its policy communication to safeguard its credibility, Executive Board Member Yves Mersch said on Friday.

“How much longer can we continue to talk about ‘even lower rates’ as being a monetary policy option?” Mersch said at an event near Hamburg.

“Considering the importance of credibility for a central bank, as mentioned, there should be no delay in making the necessary gradual adjustments to our communication.”

The ECB’s long-standing guidance, aimed at assuring markets that policy will stay easy for years to come, has been for rates to remain at present or lower levels for an extended period of time, well past the horizon of its bond purchases. (Reporting by Balazs Koranyi, Francesco Canepa and Andreas Framke)

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