Tiered ECB rate needs monetary policy case: Praet

Peter Praet, executive board member of the European Central Bank (ECB) delivers his speech at the conference "The ECB and its watchers" in Frankfurt, Germany, March 27, 2019. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - The European Central Bank must have a monetary policy case if it is to consider a multi-tier deposit rate, outgoing ECB chief economist Peter Praet said on Monday.

The ECB is currently studying whether to grant relief to banks from some of the charges on its minus 0.4 percent deposit rate, worried that weak bank profitability could impair the transmission of its policy.

But policymakers have long argued that low bank profits are not enough for the ECB to introduce such a new tool and instead, they need to be convinced that policy on the whole, for the entire currency bloc, would benefit.

Reporting by Balazs Koranyi; Editing by Peter Graff