European central bank ready to use negative rates and cheap loans to banks if needed

European Central Bank (ECB) senior economist Benoit Coeure today clarified some of the tools that the ECB has at its disposal, following on from comments made yesterday that it was ready to act flexibly and with an open mind in response to developments.

If needed, the ECB is prepared to use negative interest rates, he said. While he dismissed the need now for any new use of long-term refinancing operations (LTRO) - the provision of cheap loans from the ECB to European banks - this would also remain in the ECB's toolbox.

He added that the ECB will reassess rate guidance at every meeting, potentially providing further clarification to the "extended period" we're told rates will be kept low for.

In addition, Coeure said that political tensions within eurozone countries are contained, with the exception of those in Portugal and those coming up in Germany during September 2013 elections.