European Central Bank announces fresh stimulus as eurozone economy falters

The move marks the first time the deposit rate has changed since 2016, as Europe's economy has struggled amidst losses in demand both from Brexit and the trade war, while quantitative easing was last used in December of previous year. In a wide-ranging package of measures that will ensure outgoing President Mario Draghi leaves his mark on ECB policies long after he departs next month, the bank cut one key interest rate further below zero.

European Central Bank also announced that it will cut the deposit rate, one of its key interest rates, from -0.4% to -0.5%, which is the first time since March 2016.

"But the key point is that this commitment to more QE is open-ended: it will end shortly before the bank begins raising interest rates".

Factory output has slumped in response to diminishing worldwide trade volumes as Washington and Beijing impose punitive tariffs on each other's goods, while business investment has fallen against the uncertain political backdrop. This is the first change to the rate in three-and-a-half years.

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".

The ECB also said it was re-starting quantitative easing.

The central bank for the 19 countries that use the euro said it would cut the rate on deposits it takes from banks to minus 0.5% from minus 0.4%.

The central bank, which usually moves monetary policy in lock-step with the ECB, says negative rates have stabilised the economy and supported economic growth in the wake of the financial crisis that hit in 2008.

The pound initially jumped 0.3 per cent against the euro on the news to hit €1.1239, as the single currency registered a sharp fall. "President Trump tweeted: "[The ECB] is trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting USA exports". They get paid to borrow money, while we are paying interest!' he said.

Trump has also previously been critical of the European Central Bank for supporting the eurozone economy, arguing that it would be detrimental to U.S. interests.



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