The European Central Bank (ECB) announced a slew of measures Thursday to combat low inflation and shore up the eurozone economy, slashing key rates and imposing negative interest rates for overnight depositors to spur lending.
The bank cut its main lending rate to 0.15 percent, a record low, from 0.25 percent. Meanwhile, for the first time, it will charge banks 0.10 percent for parking funds at the central bank overnight.
The central bank stopped short of large-scale asset purchases known as quantitative easing, but offered banks new long-term funds as it outlined a four-year 400 billion euro (US$545 billion) scheme to encourage lending.
ECB President Mario Draghi said the measures are aimed at boosting lending to the “real economy”.
“If required, we will act swiftly with further monetary policy easing,” Reuters quoted Draghi as saying at a news conference.
He said the ECB’s policy-setting panel was unanimous in its commitment to use unconventional instruments if needed “to further address risks of too prolonged a period of low inflation”.
Financial markets cheered the ECB measures, with stocks on Wall Street and Europe posting significant gains Thursday. The Dow Jones Industrial Average and the broader S&P 500 index both hit new all-time closing highs in New York.