{"id":23836,"date":"2016-03-11T01:12:16","date_gmt":"2016-03-11T01:12:16","guid":{"rendered":"https:\/\/new.igihe.com\/european-central-bank-reveals-strong-stimulus\/"},"modified":"2016-03-11T01:12:58","modified_gmt":"2016-03-11T01:12:58","slug":"european-central-bank-reveals-strong-stimulus","status":"publish","type":"post","link":"https:\/\/new.igihe.com\/english\/european-central-bank-reveals-strong-stimulus\/","title":{"rendered":"European Central Bank reveals strong stimulus plan"},"content":{"rendered":"

{The ECB cuts main interest rate to zero and unveils new measures aimed at encouraging banks to increase lending.}<\/p>\n

The European Central Bank has cut its main interest rate to 0 percent from 0.05 percent, in a surprise move aimed at boosting eurozone economies.<\/p>\n

The bank, known as the ECB, said on Thursday that it will expand its asset-buying programme and will increase its monthly bond purchases from \u20ac60bn to \u20ac80bn ($67bn-$89bn), pushing more newly printed money into the economy.<\/p>\n

The bolder-than-expected stimulus package also included a reduction in the interest rate on deposits held by banks at the ECB to minus 0.4 percent, from minus 0.3 percent.<\/p>\n

The scheme also includes long-term cheap loans of up to four years to help support banks.<\/p>\n

Mario Draghi, the ECB president, said the measures would “reinforce” the momentum of the eurozone economic recovery and “accelerate” the return of inflation to close to, but below, 2 percent.<\/p>\n

Yet, European stocks markets closed sharply lower as investors appearred unconvinced by the stimulus measures.<\/p>\n

In Germany, DAX ended the day down by 2.3 percent after initially rising on the ECB announcement, while France’s CAC 40 fell by 1.7 percent.<\/p>\n

The euro, which tends to weaken with more stimulus, was 1.6 percent higher at $1.1172, having earlier tanked by 1.2 percent.<\/p>\n

Lending push<\/p>\n

The negative rate on deposits – in essence, a tax on bank’s excess funds – is aimed at pushing banks to lend rather than leave money at the central bank.<\/p>\n

More lending would promote growth and push up inflation from a worryingly low annual rate of minus 0.2 percent.<\/p>\n

The rate cut and the other measures to expand stimulus underline how far the ECB sees itself from achieving its goal of inflation of just under 2 percent.<\/p>\n

Low or negative inflation has raised fears that Europe may become stuck in deflation, in which stagnant prices weigh on wages, investment and economic growth for years.<\/p>\n

Draghi, judged to have disappointed markets in December with stimulus measures below expectations, said more action was needed because the eurozone recovery risked being dampened by the slow-down in emerging markets.<\/p>\n

“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 told a news conference.<\/p>\n

Yet, Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown, said it was hard to see how even lower interest rates and an increase in the bond-buying programme can been seen as a positive development.<\/p>\n

He says that the fact the ECB is “still pursuing such extreme monetary policy paints a depressing picture of the European economy”.<\/p>\n

Khalaf added that the markets “are beginning to question what central banks have left in the locker if the global economy slips back towards recession”.<\/p>\n

\"ECB<\/figure>\n","protected":false},"excerpt":{"rendered":"

{The ECB cuts main interest rate to zero and unveils new measures aimed at encouraging banks to increase lending.} The European Central Bank has cut its main interest rate to 0 percent from 0.05 percent, in a surprise move aimed at boosting eurozone economies. The bank, known as the ECB, said on Thursday that it […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[101],"byline":[2474],"hashtag":[],"class_list":["post-23836","post","type-post","status-publish","format-standard","hentry","category-economy","tag-internationl","byline-al-jazeera"],"bylines":[{"id":2474,"name":"AL JAZEERA","slug":"al-jazeera","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":null}],"contributors":[{"id":2474,"name":"AL JAZEERA","slug":"al-jazeera","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":null}],"featured_image":null,"_links":{"self":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/23836","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/comments?post=23836"}],"version-history":[{"count":0,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/23836\/revisions"}],"wp:attachment":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/media?parent=23836"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/categories?post=23836"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/tags?post=23836"},{"taxonomy":"byline","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/byline?post=23836"},{"taxonomy":"hashtag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/hashtag?post=23836"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}