The European Central Bank would probably have cut interest rates at its last meeting if they had not already been at the zero limit, European Central Bank chief economist Peter Praet said on Tuesday.
"If we would have had (an) interest rate margin at that time, I am convinced personally that the Governing Council would have decided to cut rates," Praet said at a forum in Washington. He declined to say how large a cut would have been appropriate.
Praet said the ECB will be taking a hard look at economic weakness at its next policy meeting on Jan. 22, and in particular at signs inflation expectations may be slipping.
Read More News and views from ECB decision day
It was important not to make a mistake in weighing up how much central banks should discount the impact of low oil prices on headline inflation, he said, but policymakers were vigilant for any signs of broader disinflation.
The ECB is considering whether to expand its asset purchases to prop up the struggling European economy, a step Praet said may require it to begin buying sovereign debt.
Praet said one precondition for such a step, a weakening in the euro zone economy, was already met. The other was a view that tools already in use were losing effectiveness.
Asked if a decision on additional steps would be taken at the Jan. 22 meeting, he said a range of factors would feed into policymakers' deliberations, including fiscal policy, but that it was possible the ECB could make a decision at a certain point and delay implementation until later.
He also said the fact the ECB was due to begin preparing minutes of its meetings for public release might influence how policymakers act.
In prepared remarks, he said intervening in the market for government bonds would send a strong signal about the European Central Bank's willingness to be accommodative and could indirectly encourage bank lending.
Spelling out the benefit of fresh money printing to buy government bonds, Praet said the market's size posed no general limitations and that buying into it could also have a positive spillover into expectations for price inflation.
"Interventions in this market would ... likely entail a stronger signal that the ECB ... is committed to maintain an accommodative stance for an extended period of time," the text said.
"For banks, broader portfolio effects might entail a shift out of government bonds - or other fixed-income instruments - and into loan creation."