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ECB Lowers Already-Negative Deposit Rate
The European Central Bank has reduced its overnight deposit rate to minus 0.3% from minus 0.2% in a bid to bolster economic growth in the eurozone.
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The European Central Bank has reduced its overnight deposit rate to minus 0.3% from minus 0.2% in a bid to bolster economic growth in the eurozone.
Pushing the rate further into negative territory discourages banks from parking their cash with the ECB and coaxes them to lend more of it to consumers and businesses. The bank left its primary lending rate unchanged at 0.05%.
The ECB also says it will continue its long-running quantitative easing program by six months to at least March 2017. The program is buying bonds at a rate of €60 billion ($66 billion) per month in hopes of nudging the region’s inflation rate from 0.1% toward a more healthy 2%.
ECB President Mario Draghi says the bank has lowered its inflation forecasts for the eurozone to 1% from 1.1% for 2016 and to 1.6% from 1.7% for 2017.
Economists, who had hoped for more aggressive measures, were unimpressed with the central bank’s economic “tinkering,” BBC News reports. Investors apparently agreed, causing a downturn on Thursday in the French and German stock markets.
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