Deutsche Bank chief warns on side effects of likely ECB rate cut
Christian Sewing says lowering borrowing costs would deepen split in society
Deutsche Bank’s chief executive has warned about the negative side effects of a likely cut in interest rates by the European Central Bank next week, arguing it would do little to stimulate the economy but would deepen divisions in society.
Christian Sewing told a banking conference in Frankfurt that an expected lowering of eurozone interest rates further into negative territory “may make refinancing cheaper for governments but it will have serious side-effects”.
The head of Germany’s biggest bank said: “Few economists, at least, believe that cheaper money on this level will do anything.
“This fits in with what we get from listening to our customers,” he added. “Medium-sized companies tell me clearly: they will not invest more just because the loan will be 10 basis points cheaper.”
He also warned of a “split in society” because negative interest rates favoured those who own assets and have access to cheap loans by pushing up the price of houses and shares, while penalising Germany’s many savers.
His comments indicate how next week’s expected monetary stimulus package from the ECB, including potential interest rate cut and restarting of its bond-buying programme, is likely to stir up political controversy in Germany.