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 ECB's purchase of government bonds was an attempt to save countries such as Greece, Spain and Portugal from default. It was particularly controversial in Germany, where multiple lawsuits challenged its legality.
The European Central Bank looks has removed a key pillar of its support for the euro area economies. At their final policy meeting this year, ECB governors announced the end of their bond-buying program.
The European Central Bank remains on track to pull the plug on its massive stimulus program for the eurozone, despite an uncertain global trade outlook and signs of slowing growth in the 19-member bloc.
We don’t know if the rumors that Italy's PM checks Italian-German bond yield spreads several times a day are true. But as the ECB ends stimulus and Rome refuses to budge on its budget, he might want to start.
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