"The European Central Bank may consider purchases of assets to hold down long-term interest rates, ECB executive board member Benoit Coeure said Sunday, the latest sign that officials are open to dramatic steps to keep inflation in the euro zone from staying too low for too long.
"Should further monetary accommodation be needed, it is reasonable to consider other operations aimed at lowering the term premium. This is where targeted asset purchases enter the toolset of monetary policy," Mr. Coeure said in prepared remarks to an International Monetary Fund conference.
The term premium is the extra yield investors demand for holding longer-term securities.
The issue confronting the ECB and other major central banks is how to stimulate the economy with official interest rates near zero. The ECB's main lending rate is 0.25%, a record low. It could be cut further, but not by much"".
