Wednesday, the Governing Council member of the European Central Bank, Axel Weber said there is still a little room to cut the main refinancing rate, but it should not go below 1%.
In a speech in Hamburg, Weber said if the interest rate falls below 1%, banks will have no incentive to lend to each other, paralyzing interbank lending.
In April, the central bank had lowered the main refinancing operations, by a quarter percentage point to an all-time low of 1.25%. The ECB has lowered a total of three full percentage points since early October 2008.
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