ECB cuts down interest rate to zero across euro area

The ECB expanded the monthly purchases bond under the asset purchase programme to €80 billion a month from its earlier €60 billion a month starting in April and intended to run until March 2017. The Dollar Business Bureau

The European Central Bank (ECB) reduced its marginal lending facility rates and its deposit facility rates.

Concerned over fresh fears of an economic meltdown in Europe, the European Central Bank (ECB) on Thursday cut interest rates to an all-time low to zero across the euro zone and decreased two other interest rates. On Thursday, a 25-member Governing Council held a meeting in Frankfurt, Germany and announced a slew of unprecedented initiatives to revive its stalled economy. “The interest rate on the main refinancing operations of the Euro system will be decreased by 5 basis points to 0.00%, starting from the operation to be settled on March 16, 2016,” ECB announced in its monetary policy decisions on Thursday. The ECB reduced its marginal lending facility rates by 5 basis points to 0.25% and the deposit facility rates by 10 basis points to -0.40%. The body expanded the monthly purchases bond under the asset purchase programme to €80 billion a month from its earlier €60 billion a month starting in April and intended to run until March 2017. The Frankfurt-based institution also went on to increase the share limits for all the securities’ purchases issued by international organisations and multilateral development banks from 33% to 50%, in order to ensure smooth implementation of asset purchases. ECB’s President Mario Draghi denied speculations that the interest rates would be reduced further. “From today's perspective, and taking into account the support of our measures to growth and inflation, we don't anticipate that it will be necessary to reduce rates further. Of course, new facts can change the situation and the outlook,” Draghi said. Draghi underscored that the key ECB interest rates will remain at present or lower levels for a longer period of time considering the present global outlook for price stability. The ECB President estimated a lower GDP growth rate for the euro area, mainly due to the weakened growth prospects in the world economy. He projected a 1.4% growth rate in 2016-17, 1.7% in 2017-18 and 1.8% in 2018-19. Draghi denied the risks to the euro area’s future growth outlook and said, “They relate in particular to the heightened uncertainties regarding developments in the global economy, as well as to broader geopolitical risks.” The ECB chief remained positive on the possibilities of the euro zone’s positive recovery during the financial year 2016-17. The global crude oil prices and the area’s current fiscal stance, that has become mildly expansionary this year from neutral in 2015, are minor positive indicators to revival, he signaled.

March 11, 2016 | 05:20pm IST

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The Dollar Business Bureau - Mar 11, 2016 11:43 IST

ECB cuts down interest rate to zero across euro area

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