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9/24/2019, 2:33 PM (Source: TeleTrader)
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De Guindos: Tiering, cheap loans mitigate risks

Lenders are especially important for monetary policy transmission, the European Central Bank's Vice President said on Tuesday in Frankfurt. Louis de Guindos claimed the latest decisions are complementary and that they are appropriate to adapt to the deterioration in the overall situation. Policymakers lowered the deposit rate, bolstered guidance, reintroduced quantitative easing, adjusted the conditions in the third series of targeted longer-term refinancing operations (TLTRO 3) and rolled out two tiers for bank reserve remuneration.

De Guindos said the last one eases the risk of pressure on rates in the money market and that it is worth €4 billion per year. Simultaneously, improving the conditions for cheap loans were warranted by the outlook's worsening and include stimulus for crediting, he asserted.

"Both measures will serve to mitigate the risk that the possible side effects of the ECB’s accommodative monetary policy stance on bank-based intermediation could undermine the sustained convergence of inflation to our aim. We are aiming to preserve favorable bank lending conditions in the euro area," the top rate-setter stated.

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