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Mario Draghi has played down speculation his central bank could drop its experiment with negative interest rates later this year, saying there were no plans to change the ECB’s commitment to keep rates on hold at least until the end of QE.

Retail banks have called on policymakers to raise the ECB’s lowest rate, its deposit rate which stands at minus 0.4 per cent, which they say is eating into bank profit margins.

Mr Draghi hit back at their calls in a speech in Frankfurt on Thursday, saying the side effects were limited and there was no reason for the ECB to change the sequencing of its exit from aggressive monetary stimulus.

At the moment, the ECB expects to keep interest rates at their current or lower levels at least until the end of QE, which is expected to continue at least until the opening half of 2018.

“The negative rates, in conjunction with the other elements of our easing package, have turned out to be powerful in terms of easing financial conditions. And the potential negative side effects have so far been limited,” said the ECB chief.

“The current wording of our forward guidance reflects exactly this assessment of side effects. And from today’s standpoint, I do not see cause to deviate from the indications we have been consistently providing in the introductory statement to our press conferences.”

Mr Draghi added that before making any alterations to policy or forward guidance inflationary pressures needed to rise further to meet the central bank’s target of just under 2 per cent.

The euro slipped on the news, falling by 0.2 per cent on the dollar to three-week low of $1.0635.

The ECB president’s comments come a day after Jens Weidmann, a German member of the ECB board, called for the central bank to lift its foot off the pedal of its stimulus measures.

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