* Provopoulos say buying corporate debt among ECB's options being studied
* Stark warn of inflation threat from G20 decision
* Says no examination was made whether extra liquidity needed
By Marc Jones
FRANKFURT, April 7 (Reuters) - ECB policymakers Vitor Constancio and George Provopoulos said on Tuesday they thought euro zone interest rates could be cut further, as Provopoulos said buying corporate debt was a possible option for the bank.
At the other end of the spectrum Executive Board member Juergen Stark criticised the G20 summit agreement to boost the IMF's Special Drawing Rights (SDRs) as ill thought out "helicopter money" and potentially inflationary.
Greek central bank governor Provopoulos and Portuguese counterpart Constancio both joined the growing ranks of European Central Bankers to signal that euro zone rates may be cut to 1.0 percent next month.
"Our main policy rate, presently at 1.25 percent, may not be the lowest limit. Depending on the outlook for price stability, I cannot exclude that we could go down from the present level, although in a very measured way," Provopoulos said in e-mailed comments to Reuters.
They were a denial of an earlier report by news agency Bloomberg that quoted him as saying that rates could be cut below 1 percent, a threshold a number of ECB policymakers have said they are reluctant to cross.
Provopoulos also said buying corporate debt and extending the length of time banks are lent money for could be two of the options on the table when the bank lays out its alternatives to interest rate cuts next month.
"Theoretically, in the context of reviving our money market, we could possibly supply liquidity for longer maturities up to one year... In addition to all non-standard measures we've already taken in the past, we could proceed with the purchase of corporate debt," he told Bloomberg in comments that were not denied.
INFLATION PALPITATIONS
As Provopoulos and Constancio talked about making the ECB's monetary policy more accommodative, at the other end of the scale Juergen Stark, one of the ECB's most ardent inflation fighters, raised concerns about last week's G20 $250 billion agreement to boost the firepower of the International Monetary Fund.
Under the plans, countries hit particularly hard by the global economic crisis would be allowed to increase their share of IMF Special Drawing Rights by using those of other countries which may not need them.
"That is pure money creation. That is helicopter money for the globe," Stark told German business daily Handelsblatt in comments later confirmed by the ECB.
"There was no examination of whether there is a global need for additional liquidity at all... One used to take a lot of time to examine something like this," he said.
"Helicopter money" has become a phrase linked to pumping money into the economy as an extreme response to the threat of deflation.
In 2002 Ben Bernanke, then a Federal Reserve governor and now its chairman, gained the nickname "Helicopter Ben" after he quoted an idea by monetarist U.S. economist Milton Friedman that money should be dropped from helicopters if an economy slid into deflation.
The results of the G20 summit have been broadly welcomed by policymakers including the ECB's President Jean-Claude Trichet, but Stark is not alone in having concerns about the G20 decisions.
IMF chief Dominique Strauss-Kahn acknowledged earlier this week the move to boost the Fund's firepower carried inflationary risks. But he has played down the significance in the current climate.
"The only drawback is the inflation risk but it's limited at the moment," he told French newspaper Le Figaro on Monday.
The concerns about future inflation come as some major economies appear to look far closer to deflation than high inflation.
The financial turmoil and subsequent sharp slump in demand and commodity prices have seen inflation in the euro zone drop to an an all-time low of 0.6 percent, well below the ECB's own target of just under 2 percent.
The bank's top policymakers have said that it may turn negative in the coming months but maintain that a more worrying spell of deflation is unlikely.
Constancio, the head of Portugal's central bank, told reporters in Lisbon on Tuesday that ECB was determined to avoid deflation and that the risk was very low. [ID:nLIS000216]
The ECB has cut interest rates to a record low of 1.25 percent in response to the ongoing problems and analysts expect it to cut them again to 1.0 percent next month, as well as lay out some other alternative plans to help the euro zone out of recession.
New data on Tuesday showed that the euro zone economy shrank more than previously thought in the last three months of 2008, adding to the stack of recent bleak news.
(additional reporting by Brian Love in Brussels, George Georgiopoulos in Athens and Sergio Goncalves and Shrikesh Laxmidas in Lisbon)
(Reporting by Marc Jones; editing by Ron Askew)