The European Central Bank launched a raft of measures on Thursday to
fight low inflation and boost the euro zone economy, cutting rates,
imposing negative interest rates on its overnight depositors and
offering banks new long-term funds.The ECB cut all its main rates
to record lows in a drive to fight off the risk of Japan-like deflation
and bring down the euro's exchange rate. For the first time, it will
charge banks 0.10 percent for parking funds at he central bank overnight.
It stopped short of large-scale asset purchases known as quantitative easing for now, but ECB President Mario Draghi said more action would come it necessary.
Draghi outlined a four-year 400 billion euro ($544.86 billion) scheme giving banks that have been holding back credit due to looming stress tests an incentive to increase lending to businesses in the euro zone.
"Now we are in a completely different world," Draghi told a news conference, citing "low inflation, a weak recovery and weak monetary and credit dynamics".
The package, adopted unanimously, was aimed at increasing lending to the "real economy", he said.
Other steps included extending the duration of unlimited cheap liquidity for euro zone banks, injecting about 170 billion euros by stopping tenders that withdrew funds spent on past government bond purchases, and preparing for possible future purchases of asset-backed securities to support small business.
Projections published by the ECB showed inflation would be just 0.7 percent this year, 1.1 percent next year and 1.4 percent in 2016, a downward revision and far below the ECB's target of below-but-close-to 2 percent.
Read more: ECB hurls cash at sluggish euro zone economy, seeks to force bank lending - Money - MSN CA
It stopped short of large-scale asset purchases known as quantitative easing for now, but ECB President Mario Draghi said more action would come it necessary.
Draghi outlined a four-year 400 billion euro ($544.86 billion) scheme giving banks that have been holding back credit due to looming stress tests an incentive to increase lending to businesses in the euro zone.
"Now we are in a completely different world," Draghi told a news conference, citing "low inflation, a weak recovery and weak monetary and credit dynamics".
The package, adopted unanimously, was aimed at increasing lending to the "real economy", he said.
Other steps included extending the duration of unlimited cheap liquidity for euro zone banks, injecting about 170 billion euros by stopping tenders that withdrew funds spent on past government bond purchases, and preparing for possible future purchases of asset-backed securities to support small business.
Projections published by the ECB showed inflation would be just 0.7 percent this year, 1.1 percent next year and 1.4 percent in 2016, a downward revision and far below the ECB's target of below-but-close-to 2 percent.
Read more: ECB hurls cash at sluggish euro zone economy, seeks to force bank lending - Money - MSN CA
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