ECB's new TLTROs will have most effect on the economy: traders

(Reuters) - Of the European Central Bank stimulus measures announced last week, the new set of cheap loans will have the most effect on the economy, according to a majority of euro money market traders in a Reuters poll on Monday.

After being under pressure to kick-start growth and stave off the threat of deflation, the ECB delivered more than most expected and announced a raft of new stimulus measures on Thursday.

However, some of the traders polled were unimpressed and did not expect last week's interest rate cuts, the increase to the quantitative easing program, the loans or the widening of asset purchasing to include corporate bonds to work.

Last year a slim majority of traders polled said the previous wave of cheap loans from the ECB, alongside QE, had not been effective in boosting interbank lending.

"None of the measures will make a material difference. But the new TLTROs (targeted long-term refinancing operations) seem to be the closest to being effective as the ECB is offering to pay banks for lending to companies," said a trader at a large dealer.

When asked to rank the ECB's measures on their effectiveness in feeding through to the real economy, 15 of 21 traders chose the TLTROs as number one.

The ultra cheap four-year TLTRO loans would be offered at an interest rate of zero but banks lending out more than a prescribed amount would get a reduction worth up to the deposit rate, currently at minus 0.4 percent.

The least effective or lowest ranked of the ECB measures was the ECB's fresh round of interest rate cuts to new record lows.

The regular poll of 22 traders showed banks would borrow 60.0 billion euros ($66.7 billion) at the ECB's weekly tender, similar to the 60.8 billion euros maturing from last week.

(Reporting by Rahul Karunakar; Polling by Siddharth Iyer and Shrutee Sarkar Editing by Jeremy Gaunt)

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