Editions:  Austria · Denmark · France · Germany · Italy · Norway · Spain · Sweden · Switzerland
Advertisement

ECB cuts rates

Share this article

ECB cuts rates
Photo: DPA
13:56 CET+01:00
The European Central Bank on Thursday unexpectedly cut its benchmark interest rate by a quarter of a point to 1.25 percent, in an apparent attempt to bolster Europe's economy amid the Greek debt crisis.

The decision to lower borrowing costs in the 17-member eurozone came as a surprise on the first day of the G20 summit in Cannes, France, where world leaders are discussing how to contain Europe's sovereign debt problems.

The financial markets had expected the ECB to leave rates unchanged, but Europe's central bankers clearly felt the Greek government's decision this week to call a referendum on an EU bailout package for the country had pushed the eurozone to the brink of economic disaster.

The cut comes just after Italy's Mario Draghi officially took over the helm of the ECB on Tuesday. He will have to justify the decision to pursue expansionary monetary policy at a time when inflation in the eurozone is clocking three percent - considerably over the ECB's two-percent target.

At his first press conference after chairing a meeting of the ECB's executive council, Draghi said the current economic outlook for the 17 countries that share the euro "is subject to particularly high uncertainty and intensified downside risks."

Germany's DAX stock index surged by three percent immediately after the ECB's decision was announced.

"The surprise interest rate cut shows just how seriously the ECB is taking the possibility that the economy could worsen next year," said Commerzbank chief economist Jörg Krämer.

The Local/DAPD/AFP/mry

Get notified about breaking news on The Local

Share this article

Become a Member or sign-in to leave a comment.
Advertisement

From our sponsors

Learn French in Switzerland: A fully immersive experience

Hiking in the Swiss Alps, visiting local chocolate factories, wine-tastings, jazz festivals and car shows are not part of your typical language course. Unless, that is, it's an Alpadia language course.

Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

Popular articles

Advertisement
Advertisement