“In the long run, the consequences of low interest rates are harmful, such as for pension funds,” said German Finance Minister.
The German Finance Minister Wolfgang Schaeuble, criticized the low interest rates of the European Central Bank, arguing that are particularly harmful for people save for retirement.
in parallel, Benoit Coeure, executive board member of the ECB, said that these stimulus policies can bring risks to financial stability, price erosion in the markets housing and more downward pressure on real rates of interest.
“in the long run, the consequences of rates low or even negative interest are harmful, such as for funds pensions, “he told the Frankfurter Allgemeine Sonntagszeitung German newspaper.
In this regard, the minister said it is possible only start to end an expansionary monetary policy with the implementation of structural reforms and increased investment.
Schaeuble has warned several times about the risks of the policy of low interest rates the ECB and, in June, said the German government considered should only be maintained for a limited period.
on the other hand, in the congress of Jackson Hole Federal Reserve of the United States, Benoit Coeure, executive board member of the ECB, he spoke in the same direction and warned that in such circumstances monetary stimulus could be weakened and generate side effects with increasing frequency.
“These (the stimulus) were taken with the implicit assumption that would be transitory,” Coeure told the symposium. “ But if other economic policies have a role, then we can not rule out that the equilibrium real rate remain low ” he said.
“Given this scenario, we could see that short-term rates are actually lower more frequently when there is macroeconomic crisis and the stimulus provided by reducing interest rates at that level, of course, be much weaker “he added.
The ECB has ventured further their interest rates into negative territory and has given the banks ultra loans cheaper, besides buying 80,000 million euros in assets each month, but inflation has followed near zero and may breach its target of 2% for at least the next two years .
Purchases of assets of the ECB will extend until next March but its warning signals suggest that the bank is in no hurry to decide whether to extend or start cutting the program, suggesting that the decision would only be taken in the fourth quarter.
Coeure stressed that the most frequent use of economic policy tools unconventional generates notable side effects such as risks to financial stability, price erosion in the housing markets and downward pressure on rates real interest rates.
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