ECB Looking to Stabilize Euro
The European Central Bank (ECB) is the body that defines the monetary policy for the Eurozone which incorporates 19 EU states that use the Euro. This is one of the most commonly traded currencies in the world, and the greatest task that is bestowed upon the European Central Bank is to implement and set monetary policy to guide its price stability. As one of its main objectives, the ECB looks to maintain the stability of prices and to maintain inflation level at a target of 2%.
The ECB offers the banks within the Eurozone a facility to borrow funds in case they are short on liquidity. Large transactions can create forex trading opportunities for investors, so it is always important to watch your forex news feeds for new developments in these areas. The banks in return pay a refinancing rate on loans from the central bank and this rate of interest determines the interest rate which other businesses will pay for loans from the banks. Therefore, through raising or lowering the interest rate or refinancing rates, the central bank exercises a direct effect economically in the region.
ECB Policy Statements
Recently, the European Central Bank through its president Mario Draghi issued a statement claiming a cut in interest rates in the Eurozone to zero from 0.05%. It backed its decision by unveiling some strategic growth-boosting measures that would help counteract the backdrop arising from the weak global economy.
The bank has also gone ahead to expand its money printing program in addition to cutting on the key bank deposit rate. Furthermore, the president implied that the interest rates would stay lower with no further cut for almost a year putting into consideration that the region was prone to negative inflation in the near future.
Negative Interest Rates
Despite going to the opposite of what most economists had expected, the bank also announced the introduction of ultra-cheap four-year loans that would be available to the banks, allowing them to borrow at negative in interest rates. With regard to the stock markets, prices boosted on the announcement of the cut in interest rates though gains went down.
This latest move by the central bank means that it will be encouraging the banks to lend out more to businesses though charging more on holding their money overnight. The central bank had been under pressure to revive the Eurozone’s economy after the single-currency block slipped back into negative inflation in February of this year. Hence, this step is designed to save the Eurozone from disastrous inflationary pressures, according to Draghi.
The European Central Bank (ECB) is the body that defines the monetary policy for the Eurozone which incorporates 19 EU states that use the Euro. This is one of the most commonly traded currencies in the world, and the greatest task that is bestowed upon the European Central Bank is to implement and set monetary policy to guide its price stability. As one of its main objectives, the ECB looks to maintain the stability of prices and to maintain inflation level at a target of 2%.
The ECB offers the banks within the Eurozone a facility to borrow funds in case they are short on liquidity. Large transactions can create forex trading opportunities for investors, so it is always important to watch your forex news feeds for new developments in these areas. The banks in return pay a refinancing rate on loans from the central bank and this rate of interest determines the interest rate which other businesses will pay for loans from the banks. Therefore, through raising or lowering the interest rate or refinancing rates, the central bank exercises a direct effect economically in the region.
ECB Policy Statements
Recently, the European Central Bank through its president Mario Draghi issued a statement claiming a cut in interest rates in the Eurozone to zero from 0.05%. It backed its decision by unveiling some strategic growth-boosting measures that would help counteract the backdrop arising from the weak global economy.
The bank has also gone ahead to expand its money printing program in addition to cutting on the key bank deposit rate. Furthermore, the president implied that the interest rates would stay lower with no further cut for almost a year putting into consideration that the region was prone to negative inflation in the near future.
Negative Interest Rates
Despite going to the opposite of what most economists had expected, the bank also announced the introduction of ultra-cheap four-year loans that would be available to the banks, allowing them to borrow at negative in interest rates. With regard to the stock markets, prices boosted on the announcement of the cut in interest rates though gains went down.
This latest move by the central bank means that it will be encouraging the banks to lend out more to businesses though charging more on holding their money overnight. The central bank had been under pressure to revive the Eurozone’s economy after the single-currency block slipped back into negative inflation in February of this year. Hence, this step is designed to save the Eurozone from disastrous inflationary pressures, according to Draghi.