European Central Bank board member Benoit Coeure has rejected criticism that the bank’s decision to cut interest rates last week is hurting savers.

In a guest commentary for German newspaper Handelsblatt published yesterday he said low interest rates for savers were a result of the recent deep recession and a fragmented financial market in the eurozone.

“Higher interest rates would have exacerbated the recession, delayed a recovery and contributed to deflationary risks. Higher rates would therefore have hurt savers,” he said.

The ECB cut its main rate to a new record low of 0.25 per cent last week, taking financial markets by surprise.