ECB may lower interest rate below ‘natural’ level – Simkus

The European Central Bank (ECB) is considering reducing its key interest rate to its “natural” level of 2 per cent to 3 per cent, but may need to cut it further if disinflation becomes entrenched, according to ECB policymaker Gediminas Simkus.

Speaking in Vilnius, the Lithuanian central bank governor highlighted the potential for rates to drop below the natural level if inflation continues to fall persistently.

“If the disinflation processes get entrenched, it’s possible that rates will be lower than the natural level,” Simkus stated.