Further evidence, were it needed, of the eurozone’s worsening financial crisis came today after the European Central Bank announced a 0.25% reduction in its interest rate.
Differeing from its British counterpart, the European Central Bank has been more hawkish in policy- favouring higher interest rates in order to tighten fiscal control and maintain lower inflation. But today’s decision by the 23- strong panel suggests even the hawks are relaxing controls in a bid to stimulate lending.
“Much like in 2008 the ECB has had to reverse a string of rate hikes, as the continent teeters on the brink of a recession,” commented Nick Jones, Chief Economist at World First forex brokers.
“It’s good to see the new ECB governor, Mario Draghi, come out swinging. Hopefully this will form part of a concerted effort to drag the Eurozone economy off the canvas.
“We expect another rate cut next month as well, to completely erase the rises seen earlier this year.”
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