The European Central Bank has cut its benchmark interest rate to 0.05%, and introduced new stimulus measures.
The ECB had earlier cut its rate from 0.25% to 0.15% in June, and also became the first major central bank to introduce negative interest rates.
It will also launch an asset purchase programme, which will buy debt products from banks.
It is hoped this move will add liquidity to the financial system and revive lending.
‘Mid-road’
The move falls short of a programme of buying government bonds – a process known as quantitative easing (QE), and one which the US Federal Reserve has undertaken.
ECB boss Mario Draghi said that QE had been discussed by the bank.
“Some of our governing council members were in favour of doing more than I’ve just presented, and some were in favour of doing less,” he said.
“So our proposal strikes the mid-road…. a broad asset purchase programme was discussed, and some governors made clear that they would like to do more.”
The ECB has been under pressure to kick-start the eurozone economy, as manufacturing output has slowed and inflation has fallen to just 0.3%.
via BBC
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Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
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