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By Bloomberg

The European Central Bank will have to cut its deposit rate further to ensure enough government bonds are eligible for purchase under its sovereign-debt purchase program, according to Standard Bank Plc.

ECB President Mario Draghi said in Nicosia, Cyprus, Thursday that the central bank’s 1.1 trillion euro ($1.2 trillion) quantitative easing plan won’t include debt with yields below its minus 0.2 percent deposit rate. At minus 0.209 percent, the rate on German two-year notes is already below that threshold, while the yields on equivalent Belgian, Austrian and Dutch securities are all within seven basis points of the level.

“There’s a good chance that lower bond yields force the ECB to cut policy rates again – at least the deposit rate,” Steve Barrow, the London-based head of Group-of-10 strategy at Standard Bank, wrote in an e-mailed note. “The ECB could be forced to drop the deposit rate in order to widen the bond universe to keep on track with its bond buying plan.”

The ECB last cut its deposit rate in September. Central bank officials maintained interest rates at record lows at a policy meeting on Thursday, holding the key refinancing rate at 0.05 percent.

Buying in anticipation of the ECB’s purchases has helped push the yield on about 25 percent of euro-area sovereign securities below zero as of Thursday, according to data compiled by Bloomberg. That means buyers now will get less back when the debt matures than they pay.