ECB's Schnabel: Negative interest rate policy has been successful

The European Central Bank's (ECB) negative interest rate policy has been successful, Isabel Schnabel, Member of the Executive Board of the ECB, noted in a speech delivered at the 35th Congress of the European Economic Association on Wednesday.

Additional takeaways

"Negative rates can have side effects on banks’ profitability and risk-taking behaviour."

"Over the past few years, positive effects dominated."

"Side effects are likely to become more relevant over time."

"The pandemic is a wake-up call for governments to foster innovation and potential growth."

"There is considerable uncertainty as to the precise level of the reversal rate and current estimates suggest that the ECB has not reached the effective lower bound."

Market reaction

The EUR/USD pair edged slightly lower in the last minutes and is currently down 0.2% on the day at 1.1809.