Global Economic & Market Outlook – Focus Notes (Friday, March 11, 2016)
ECB launches a bold package of easing measures
At its regular monetary policy meeting on Thursday 10 March, the ECB Governing Council announced a bold package of monetary easing measures, including a cut in all key interest rates aiming to boost domestic economic activity and counteract heightened risks on its price stability objective. More specifically, the interest rate on the main refinancing operations of the Eurosystem and the interest rate on the marginal lending facility were unexpectedly decreased by 5bp each to 0.00% and 0.25%, respectively, while the deposit facility rate was lowered by 10 basis points to – 0.40% as anticipated, all effective from 16 March 2016. As was suggested by the ECB President Mario Draghi at the press conference that followed the conclusion of the meeting, the proposal for a tiered system for the deposit facility was eventually rejected for the purpose of not signaling that rates could necessarily keep falling stressing that the Central Bank’s emphasis will now shift (from rate cuts) to other unconventional policy tools.
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