Juergen Stark, a member of the European Central Bank's (ECB) executive board, said in an interview with the Portuguese newspaper Publico that despite the recent increase in interest rates that the ECB put into effect, rates were still very low and encouraging to growth. He also said that banks in troubled nations like Portugal cannot depend on more funding from the ECB.
Reuters reported that in the interview, Stark said that "a gradual increase in interest rates" had been under discussion by ECB policymakers. Of the present rate, he was quoted as saying, "I agree that even after it was raised to 1.25%, the interest rate is still very low in historical terms. It is still very accommodative and contributes to economic growth and job creation."
When asked how banks in Portugal could lessen their reliance on the ECB without making the country's citizens even more unhappy, Stark replied that the ECB had hit its support limit. "We cannot do more in this respect," he said. "There is an overall improvement in the interbank market in the euro area, but admittedly not in all regions."
