The European Central Bank (ECB) did it again. Mario Draghi and Co. continued slashing interest rates, expanded quantitative easing and pledged to fight ultra low inflation rates. It’s becoming quite interesting over in Europe.
Here is what the ECB did on Thursday:
– Cut the deposit rate by 10 basis points to 0.4 percent.
– Cut the main refinancing rate from 0.05 percent to zero
– Cut its marginal lending rate from 0.3 percent to 0.25 percent.
– Increased monthly asset purchases from 60 billion euros to 80 billion euros.
– Promised to buy corporate debt and launch four new rounds of cheap loan packages.
Pretty much all of the central bank’s interest rates are heading into subzero territory.
Draghi says this move will spur economic growth by boosting lending and consumption.
“A bank that is very active in granting loans to the real economy can borrow more than a bank that concentrates on other activities,” Draghi said in a statement at a news conference.
“With today’s comprehensive package of monetary policy decisions, we are providing substantial monetary stimulus to counteract heightened risks to the ECB’s price-stability objective,” he added. “The Governing Council expects key interest rates to remain at the present or lower levels for an extended period of time, and well past the horizon of our net asset purchases.”
How much lower can rates fall? Draghi assured Europeans that there are limits.
“The bottom line … is that basically more and more the emphasis will shift from rates instruments to other non-conventional instruments,” Draghi said.
The entire hour-long press conference can be viewed in the embedded video below:
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