FRANKFURT: The European Central Bank has policy options even if the benchmark interest rate were to fall to zero, ECB Executive Board Member Peter Praet said in a newspaper interview.
"We have enough room for measures; there is no 'last bullet'," Praet told the Sueddeutsche Zeitung in an interview when asked whether the central bank would rule out any steps, such as asset purchases, to counter falling prices.
"Once the main interest rate is at zero, one has to deploy quantitative measures. This doesn't have to be a bond programme, it can also be liquidity injections for banks, but we are not at that point," Praet said in the interview published on Saturday.
Praet said there was no deflation in the euro zone but cautioned that low inflation over a prolonged period was also dangerous because it could hold back business activity.
The ECB surprised financial markets on Nov. 7 by cutting its main rate to a record low of 0.25 percent.
Around a quarter of the council members, led by Bundesbank chief Jens Weidmann, spoke out against a cut this month, a source familiar with the discussions told Reuters subsequently.
Praet and fellow policymaker Christian Noyer played down talk of a split in the council, saying there was broad consensus on the need for a credit loosening.
"The debate revolved around the timing and the form of additional measures," Noyer told the Frankfurter Allgemeine Zeitung in an interview also published on Saturday.
Both policymakers denied that there was a North versus South division in the council.
"I have the impression that in all euro countries there are certain economists or politicians who are against the euro in principle and try to get member states to antagonise one another but that will only strengthen our solidarity," said Noyer, who is also governor of the Bank of France.
Members of the ECB's policy council are required to represent the whole of the euro zone and not particular countries or interests.
Noyer praised Germany's export performance, which he said was also helping business at suppliers in countries like France and Italy.
But both Praet and Noyer said Germany ought to invest more in its own economy and infrastructure, which would help boost domestic demand.
"More kindergarten places would help keep mothers actively employed, drawing pay checks and spending more," Noyer said. "That could even strengthen Germany's competitiveness."
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