The European Central Bank announced interest rate cuts and restarted QE
On September 12, local time, the European Central Bank announced a 10-basis-point cut in deposit rates to -0.5%, expected to be – 0.5%, with a previous value of – 0.4%, the first rate cut by the European Central Bank since 2016.
The ECB maintained the main refinancing rate unchanged at 0.00% and the marginal lending rate unchanged at 0.25%. The ECB also announced the resumption of QE and will begin to implement the interest rate classification system.
In fact, the ECB’s August interest rate resolution has laid the groundwork for this month’s rate cut. The policy statement at that time showed that the ECB had adjusted its forward-looking guidelines to “plan to keep the benchmark interest rate at or below its current level until at least the first half of 2020” to ensure that inflation would reach its target of 2% in the medium term. If necessary, it will continue to maintain a favourable liquidity environment and adequate monetary easing, and plan to assess policy options, including the interest rate stratification system and a new round of asset purchase plans.
The current weak economy and worrying inflation in the euro area put pressure on the ECB to revitalize the euro area. After the announcement of the interest rate resolution, ECB President Draghi will hold a press conference at 20:30 Beijing time.