The ECB has cut its base lending rate to 0.25%. The euro slid, markets rallied, and credit became even cheaper. The cut will likely benefit struggling eurozone countries. But it could also ward off eurozone deflation.
The European Central Bank (ECB) knows it can’t change its loose monetary policy too rapidly, lest it shock markets and banks. But change will have to come soon, maybe as soon as Thursday when governors meet again.
For nine years, interest rates have fallen and the European Central Bank has fired up the economy with a flood of money. It is becoming increasingly clear that this cannot last forever.
After the central bank's latest policy meeting, its president Mario Draghi provided only vague hints as to how the ECB would wind down its huge asset purchases. Fast action has been complicated by a much stronger euro.
European Central Bank (ECB) chief Mario Draghi has called the bank's ultra-loose monetary policy a success, but admitted there were gaps in understanding the effects of the "new tools" on the real economy.
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