EUROZONE CRISIS: Anger as ECB keeps interest rates at ultra-low levels despite warnings

Since June 2014, the European Central Bank’s (ECB) interest rate has been set to negative levels, meaning borrowers are effectively being paid to accept loans.

The aim is to stimulate economic growth by making more cheap money available, but banks from the EU’s wealthier nations – especially Germany – have blasted the strategy for effectively bankrolling debt-ridden eurozone countries. 

And richer eurozone members have also criticised the ECB’s policy because it makes loaning money far less profitable for them.

The ECB’s current rate of minus 0.4 per cent is the latest in a series of cuts by European finance bosses below the zero mark. 

But calls from northern states appear to have fallen on deaf ears and, at a panel of global finance bosses yesterday, ECB president Mario Draghi revealed he had no plans to hike interest rates. 

He told the meeting in Washington his pledge to maintain interest rates at their current levels “well past” the end of the ECB’s current debt-buying strategy – which runs until the end of the year – was very important in keeping borrowing costs down. 

Mr Draghi also hit back over criticism his strategy was damaging the profitability of banks.

He told the panel at the Peterson Institute for International Economics: ”By and large our negative interest-rate policies have been a success.

”We haven’t seen the distortions that people were foreseeing. 

“We haven’t seen bank profitability going down; in fact it is going up.”

But before Mr Draghi’s had even made his remarks yesterday, the head of Germany’s central bank made yet another call for a change in ECB policy.

In an interview with a German newspaper, Jens Weidmann, head of the Bundesbank, said: “[Ultra-low rates] must not last too long and, in an economic upturn, the monetary policy taps should be turned off in a quick and consistent manner.”

ECB bosses are due to meet on October 26 to formally announce their long-term strategy, but Mr Draghi’s comments yesterday are a strong indication there are no plans for a change in direction.