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'The European Central Bank on Thursday cut interest rates and took a raft of unconventional steps to prevent the 18-country eurozone from sliding into a bout of deflation that could kill off a muted economic recovery.
The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.
The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.
The actions contributed to a rally in European stock markets and a further fall in the value of the euro.
The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'
European Central Bank adopts negative interest rates - Business - CBC News
The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.
The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.
The actions contributed to a rally in European stock markets and a further fall in the value of the euro.
The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'
European Central Bank adopts negative interest rates - Business - CBC News