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ECB cut interest rates, but sees no need for further cut

Thursday, Mar 10 2016
The ECB said it was lowering its benchmark interest rate to a record-low 0.0% from 0.05%, surprising market players who were expecting no change. The central bank also cut its deposit facility rate to -0.4% from -0.3%, in line with market expectations. Meanwhile, the central bank reduced its marginal lending rate to 0.35% from 0.30%. 
The ECB also said it was to increase the size of its monthly quantitative easing program to approximately €80 billion from the current €60 billion, starting in April, with investment-grade bonds added to the mix of assets eligible for purchase.The central bank also announced new series of four targeted longer-term refinancing operations to be launched in June.
 
Regarding economic projections annual HICP inflation is expected to be 0.1% in 2016 [from 1.0% in Dec], 1.3% in 2017 [from 1.6% in Dec] and 1.6% in 2018. Annual real GDP is expected to increase by 1.4% in 2016 [from 1.7% in Dec], 1.7% in 2017 [unchanged from Dec] and 1.8% in 2018.
 
However, at the following Press Conference ECB President Mario Draghi pointed out that he sees no need for further rate cut in the near future an all of the introduced monetary steps goal at solid recovery of the inflation and heading towards ECB objectives.
 
After initial decline euro completly rebounded and is currently being traded near 1.1050 area.
 
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