ECB reaction: 'No guarantees latest bazooka will be effective'

Cut rates and expanded QE

Laura Dew
clock • 4 min read

Industry commentators have described the European Central Bank's announcement to cut rates and expand its QE programme as a "positive surprise" but warn any ensuing market rally is likely to be "short-lived".

The European Central Bank (ECB) president Mario Draghi cut rates by 10bps and also boosted its quantitative easing programme by €20bn to €80bn from April in a bid to stimulate growth in the region. Draghi (pictured) had been expected to make a cut of up to 20bps in the overnight bank deposit rate, due to volatility in stockmarkets, weaker inflation and the drop in commodity prices. The 10bps cut means the rate has fallen from -0.3% in December to -0.4%, effective from 16 March 2016. Its benchmark interest rate was cut by 5bps to 0.00%. Meanwhile, the bank also boosted and widened t...

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