ECB moves to fire up economy, boost inflation with fresh stimulus

The European Central Bank delivered on Thursday a surprise cut in interest rates and boosted its bond-buying programme as part of its efforts to head off dangerously low inflation while firing up the sluggish eurozone economy.

In addition to cutting its benchmark refinancing rate for the first time to zero, the ECB lowered the deposit rate deeper into negative territory.

The Frankfurt-based ECB announced a 10-basis-point cut in the deposit rate, which is the rate it charges financial houses for parking funds at the bank.

The ECB hopes the reduction in the deposit rate to minus 0.4 per cent from minus 0.3 per cent will force financial houses to stop amassing funds at the bank and instead pump the money back into the economy of the 19-member eurozone.

At the same time, the ECB said it was boosting its bond-buying programme by 20 billion euros (22 billion dollars) to 80 billion euros a month.

Last update: Fri, 24/06/2016 - 08:49

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