The European Central Bank (ECB) will continue to do whatever it takes to pursue its price stability objective, vice-president Vitor Constancio said in a speech on Thursday.
He also stressed the importance of other policies, however, which were needed to deliver a "lasting and sustainable improvement in economic growth prospects". In March, the ECB cut its forecast for euro zone growth to 1.4 percent in 2016 from 1.7 percent.
In a speech in Brussels Thursday, Constancio said that when looking at the ECB's controversial March 10 decision to further cut interest rates and increase quantitative easing, "it is essential to consider the global environment in which they were taken. This environment was characterized by subdued growth, historically weak trade developments and low inflationary pressures reflecting sharp falls in energy prices."
On the decisions taken last month by the ECB to cut its main refinancing rate to 0.0 percent and its deposit rate to -0.4 percent, Hans-Helmut Kotz, program director at the SAFE Policy Center and Fellow at Harvard University, told CNBC: "Any measure comes with consequences that you do not actually like… in the case of negative interest rates, it definitely puts pressure on bank earnings."