ECB will not reduce deposit rate below zero, traders claim

14 May 2013

The European Central Bank (ECB) will not reduce its deposit rate below zero in the next few months, according to the majority of traders polled by Reuters.

This comes after ECB policymaker Ignazio Visco backed the move to implement it, claiming such a move would help the eurozone economy.

Some 22 of 25 euro money market traders said they do not expect the ECB to move the deposit rate into negative territory, regardless of Mr Visco's comments.

Earlier In May, ECB president Mario Draghi said the central bank was "technically ready" to cut the deposit rate in order to encourage banks to lend out money to the real economy.

However, other policymakers have attempted to reduce speculation about any lowering of the deposit rate, warning it may have negative implications for bank operations and bond markets.

Cutting the deposit rate below zero would lead to commercial banks paying a charge to place their money securely overnight at the ECB.

By Asim Shah

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