European Central Bank President Jean-Claude Trichet said on Monday the bank could interest rates further but that its deposit rate was already at very low levels, and added it could use more non-conventional tools to help the troubled banking system.
As regards the future rate of our main refinancing operations, presently at 1.5 percent, I said clearly that we could decrease it again, Trichet said in an interview with the Wall Street Journal.
We will certainly continue to do whatever we think optimizes our own situation. In the next decisions that we could take, it's pretty possible that we would continue to be non-conventional through the channel of bank financing. This channel remains for us essential, he said.
Trichet said that when considering potential moves such as buying assets central banks had to maintain a clear distinction of responsibilities from governments.
As regards possible outright purchases of securities in general I said that we are not pre-committed for any new decisions.
One element which has to be taken into account is that the risks of the central banks and the risks of the governments are, in the euro area, clearly separated without combination of risks or blending of responsibilities, he said.
Trichet's remarks come as the ECB becomes increasingly isolated among central banks as it has not yet moved beyond interest rate cuts into other quantitative measures to boost the recession-hit euro zone.
Both the U.S. Federal Reserve and Bank of England moved recently to purchase some of their governments' bonds to pump more money into the system and spur their sputtering economies.
Trichet also maintained a reluctance to see ECB interest rates fall to zero.
There are a number of drawbacks associated with policy rates deliberately put at a zero level by the decision of the central banks.
But what counts are the interest rates that are in the market and that the public gets, he said adding that euro zone six-month money market rates were below those in the United States.
(Reporting by Ben Deighton and Marc Jones; Editing by Kim Coghill)