Lower interest rate no good to anyone

The ECB's bringing the base interest rate down to a record low of 0.75 percent on Thursday won't be effective because in the present situation it will boost neither investment nor consumption, the left-liberal daily Der Standard contends: "Lowering the interest rate is like drinking beer. The first pint may tickle the palate, the second lift your mood. But the fifth or sixth, at most, is too much of a good thing. Lowering the interest rate to 0.75 percent will convince few businesses to invest in projects. And if it does, the quality of the investment must be extremely dubious if it's only profitable at an interest rate of under one percent. For that reason the ECB's decision to cut the interest rate will not usher in a new trend in the Eurozone. Economic recovery is not being smothered by high short-term financing costs, but because the future of the Monetary Union is being put in question and political insecurity is dampening investments and consumption."

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