United States Treasury Secretary Steve Mnuchin told CNBC the European Central Bank rates change came as no surprise to Washington. They are trying, and succeeding, in depreciating the Euro against the Very strong Dollar, hurting USA exports....
The ECB will also cut its deposit rate - the interest paid to commercial banks when they place funds with the central bank - by 0.1 percentage points to a new all-time low of -0.5%, meaning banks incur charges on any balances they keep there.
The ECB said: "The Governing Council now expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, two percent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics".More news: Over 300 Nigerians evacuated from South Africa by local airline
The "forward guidance" on rates abandons previous language naming mid-2020 as the earliest possible date for a rate hike.
Starting on November 1, the bank will also resume its asset purchase program at a monthly pace of 20 billion euros. It will buy €20bn of debt a month from 1 November.
"The key point is that this commitment to more QE is open-ended", commented Andrew Kenningham of Capital Economics.
Uncushioned negative rates had so far cost eurozone lenders around €7 billion per year. The goal is to encourage banks to offer more loans to businesses and individuals to provide a fresh boost to Europe's economy. "It remains doubtful, however, that this will do much to reboot the euro-zone economy let alone achieve the near 2% inflation target", he added.More news: Scientists Discover New Planet With Water
It will be up to Draghi to defend the governing council's measures at a 2.30pm (7.30pm Bangkok time) press conference. Inflation has begun to fall, the continent is feeling the effects of the trade war between China and the US, and Germany, Europe's largest economy, has been teetering on recession.
Unveiling the stimulus package to avert a deeper slowdown, Draghi said: "The package is quite powerful, both in the short term but also in the long run".
Meanwhile, Germany's central bank warned in August that the country, which is considered the economic powerhouse of the bloc, could soon enter a recession.More news: Arizona murder suspects caught after escaping transport from Upstate NY
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