Euro Zone Rates Likely to Stay Low for Years, Says Estonia Central Bank Chief

        By Liis Kдngsepp
        Interest rates in the euro zone are likely to stay as low as they are now for years, Ardo Hansson, a member of the European Central Bank's Governing Council, said Friday in an interview on Estonian television.
        "I think we can rather talk about years than months," Mr. Hansson, who heads Estonia's central bank, said in an interview on ETV. "At the moment we see no threat yet that inflation would start increasing significantly."
        Inflation in the euro zone is currently too low and the European Central Bank has the task to "hold it higher," he said.
        Mr. Hansson's remarks come one day after the ECB took the historic decision to send the rate on overnight bank deposits into negative territory, effectively charging banks for leaving funds with the ECB.
        Mr. Hansson said this decision was "unprecedented" for a big economic bloc and that it was hoped that the move would spur commercial banks to lend money to the private sector.
        "If money is just sitting in the central bank, it is not being used," he said. "We want it to be used, that banks--instead of keeping the money with us--would start looking to put it in the economy. This should help raise demand and help inflation to rise a bit."
        Mr. Hansson believes the ECB's rate decision will also influence those households that have borrowed money as their interest rates should fall a bit now, potentially increasing their disposable income.
        Write to Liis Kдngsepp at kangsepp@gmail.com
        (END) Dow Jones Newswires

        June 06, 2014 03:16 ET (07:16 GMT)