ECB cuts key interest rates and expands stimulus to lift inflation Description video: ECB, 사상 첫 기준금리 ‘제로’…양적완화도 확대\nThe European Central Bank has unleashed some aggressive measures to prop up the eurozone economy.\nIt has cut all three of its interest […]
ECB cuts key interest rates and expands stimulus to lift inflation
ECB, 사상 첫 기준금리 ‘제로’…양적완화도 확대\nThe European Central Bank has unleashed some aggressive measures to prop up the eurozone economy.\nIt has cut all three of its interest rates… and expanded buying in the hope of coping with ultra-low inflation.\nPark Jong-hong reports. \nThe stimulus measures were all-out and comprehensive.\nFor the first time the European Central Bank has paved the way for a zero interest rate era by cutting the key lending rate to zero from point-zero-five percent.\nAlso it pushed the deposit rate further into negative territory to minus point-four percent a cut of 10 basis points and the lending facility rate was cut to a quarter-of-a-percent from zero-point-three percent.\n\n\n\”The Governing Council expects key interest rates to remain at present or lower levels for an extended period of time and well past the horizon of our net asset purchases.\”\n\nThe measures are hoped to boost the flagging eurozone economy especially by helping to lift inflation in the eurozone.\nInflation has remained lower than the central bank target of two percent for three years running.\nIn addition to the rate cuts, the ECB added it would expand its bond-buying stimulus program by raising monthly purchases to 80 billion euros from the current 60 billion and that it will also include purchases of corporate bonds.\nThe host of measures, deemed more radical than investors had expected, were the latest in the ECB’s quantitative easing program that began a year ago.\n\n\”For the decision of the ECB, it’s a surprise for the entire market. It’s beyond expectation and that’s why the market goes up naturally. But on the other hand, the people who are concerned about a possible exit and possible bubbles which might develop are bigger and bigger and they rise.\”\n\nAs for the day’s trading, Europen markets fell across the board after a brief rally during the day.\nThe FTSE 100 in London closed lower by nearly one-point-eight percent while the DAX in Germany seemingly bore the brunt of the ECB’s initiatives plunging more than two-point-three percent.\nPark Jong-hong, Arirang News. \n\nVisit ‘Arirang News’ Official Pages\nFacebook(NEWS): http://www.facebook.com/newsarirang\n\nHomepage: http://www.arirang.com\nFacebook: http://www.facebook.com/arirangtv\nTwitter: http://twitter.com/arirangworld\nInstagram: http://instagram.com/arirangworld
ECB cuts key rate, resumes buying bonds
The European Central Bank (ECB) on Thursday announced a massive new bond buying program in an attempt to stimulate the eurozone economy.
President Mario Draghi announced that the ECB will cut its key deposit rate by 10 basis points to -0.5%, in line with expectations. The ECB currently expects interest rates to remain at or below their current level until it becomes clear that the inflation forecast «is steadily approaching a level close enough but below 2% within its forecast horizon, and such convergence remains».
The ECB also improved conditions on its long-term loans to banks and introduced a tiered deposit rate to help the banking system.
«The Governing Council expects (the bond purchase) to last as long as it takes to amplify the trade-off impact of its interest rates, and to end shortly before the ECB starts raising key interest rates», – said in a statement by the ECB. The central bank’s quantitative easing program implies spending € 20 billion a month to buy assets, if necessary.
Economists surveyed by Reuters expected a 10 basis point cut in the deposit rate, a tiered deposit rate to support banks, a € 30bn monthly bond purchase since October, and a renewed promise to keep rates low for longer..
Overall, markets have been anticipating some form of stimulus, although in recent weeks the hawks in the ECB’s governing board have taken steps to downplay the scope of the upcoming measures..
The slowdown in the eurozone economy, persisting low inflation and the trade war between the US and China indicate that the European regulator is forced to introduce stimulus programs.
Recently, economic data has not been promising, although purchasing managers’ indices (PMI) have shown some stabilization, despite weakness in the industry..