ECB: European Central Bank raises penalty interest and buys bonds again
Banks will have to pay 0.5 percent interest in the future if they deposit money with the central bank. The ECB is also resuming its controversial bond purchases.
European Central Bank raises penalty rates and buys bonds again - page 1
The European Central Bank (ECB) has raised penalties for banks and is resuming its controversial bond purchases. Instead of 0.4 percent, banks will have to pay 0.5 percent interest in the future if they deposit money with the central bank, as the ECB announced. The Council of the ECB also agreed to invest 20 billion euros in securities monthly from 1 November.
Thus, the central bank again tightened its loose monetary policy at the end of the term of office of ECB President Mario Draghi. The key interest rate, which has been at a low of zero percent since March 2016, remains unchanged at this level.
With the penalty rate, the ECB wants to get the banks to lend more money in the form of loans to businesses and consumers in order to support the economy. That should also increase the price increase. In order to relieve the banks somewhat, the ECB introduces a graduated rate for certain allowances.
At the end of December, the ECB had ended its purchase of government and corporate bonds for the time being. However, funds from expiring securities are reinvested.