European Central Bank cut interest rates for the first time in three and a half years September 13th 4:12
The European Central Bank has decided to further reduce the negative interest rate for the first time in three and a half years to further support the eurozone economy, which has been sluggish due to the effects of trade friction between the United States and China, and has further advanced its unusual policy. . Dr. Draghi stressed the idea that there could be further rate cuts while continuing monetary easing over the long term.
The European Central Bank held a board meeting at its headquarters in Frankfurt, Germany on the 12th, decided to further reduce the interest rate when depositing funds from financial institutions from the current minus 0.4% to minus 0.5%, and adopted an unusual policy Proceeded further.
With the aim of further diverting funds from financial institutions to corporate loans, interest rate cuts are the first in three and a half years since March 2016.
We have also decided to resume the quantitative easing measures to buy various assets and supply a large amount of money to the market, starting at November, at a scale of € 20 billion per month.
In the background, the economic slowdown in the euro area is intensifying due to factors such as trade friction between the United States and China.
Regarding future policy, Dr. Draghi stressed the idea that further monetary easing could occur, given that monetary easing will continue for a long time until the economy stabilizes.
However, if the current negative interest rate is further reduced, there are also concerns about the “side effects” that put pressure on the management of financial institutions.
Under these circumstances, the central bank of Europe will be forced to steer if interest rate cut competition further advances due to the desire to curb price increases in its own currency so as not to be disadvantageous in exports.
Challenges in rebuilding the eurozone economy
The European Central Bank confirmed on December 12 that the Eurozone economy is exposed to downward risks due to trade friction between the United States and China and the UK ’s withdrawal from the EU = European Union. = The forecast of growth rate for the total production in the region has been revised downward.
The euro-zone economy slowed down as a result of the European Central Bank's introduction of a package that mobilized all possible policies such as resumption of quantitative easing as well as interest rate cuts as additional monetary easing measures. There is a sense of crisis in being.
The European Central Bank has shown its stance of continuing monetary easing measures in the future, but monetary easing has been prolonged since the Lehman Shock, and its effects have been pointed out.
At the press conference after the board of directors, Draghi, the European Central Bank, repeatedly said that “governments in each country should embark on fiscal spending” and argued that monetary policy was not enough to support the eurozone economy.
In the euro zone, Germany's largest economic power, Germany, has fallen into a negative growth, and it will be a focus on how governments will respond to the recovery.