ECB Cuts Rates to 1%

In Financials, Politics on May 7, 2009 at 14:51
ECB offices - Frankfurt

ECB offices - Frankfurt

The European Central Bank has cut the key interest rate by 25 basis points to 1%, the lowest in its 10-year history. The shocking news however is that the ECB also agreed to inject money into the EU economy by buying euro-denominated debt, a process named ‘quantitative easing’. The size of it will be €60bln.

The ECB’s announcement followed Bank of England’s decision to keep rates at 0.5%. BoE have also decided to pump the UK economy with an extra £50bln.

Unlike the US and the UK, the ECB can not buy European government bonds as this would have severe implications on the member states’ budget deficits.

I still find ECB’s actions falling behind the curve. They are too worried about future soaring inflation rates but this is not the issue here..

by The Self-Seeker

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