ECB surprises with rate cuts amid recovery fears
Source: AP-Excite
By DAVID McHUGH
FRANKFURT, Germany (AP) — The European Central Bank surprised markets by cutting its key interest rate to a record low on Thursday, a bid to help Europe's recovery from going into reverse.
Ahead of a press briefing, where further stimulus measures may be announced, the ECB trimmed its benchmark interest rate to 0.05 percent from a previous record low of 0.15 percent.
The benchmark refinancing rate determines what banks pay the ECB for credit. It influences what banks charge businesses and consumers to borrow. Lower rates stimulate more lending and growth.
The ECB also cut its deposit rate, what banks pay to keep their money at the central bank, to minus 0.2 percent from minus 0.1 percent.
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FILE - In this Aug. 7, 2014 file photo Head of the European Central Bank, ECB, Mario Draghi attends a news conference in Frankfurt, Germany. European Central Bank President Mario Draghi says there{2019}s room for governments to dial back austerity, within limits. The ECB is looking at more stimulus, such as pumping new money into the economy by purchasing bonds. But such central bank stimulus can{2019}t do it all alone. {201c}It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this,{201d} he said in a speech last week at a U.S. Federal Reserve conference at Jackson Hole, Wyoming. (AP Photo/dpa, Boris Roessler, File)
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