ECB announces stimulus measures to ease Coronavirus impact but refrains from cutting rates

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To the surprise of many investors, ECB President Christine Lagarde refrained from cutting interest rates. CREDIT: European Central Bank

The European Central Bank (ECB) President, Christine Lagarde, has today announced a series of stimulus measures to support the European markets through the Coronavirus crisis. She announced measures, such as issuing cheap loans to banks, ramping up bond purchases and buying more Eurozone debt to mitigate the economic shock of the Coronavirus pandemic.

As part of its package, the ECB said it would offer more generous loans to banks so they can keep lending to small businesses. It said it will also buy 120 billion euros in additional bonds this year, supplementing 20 billion euros in existing monthly purchases.

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However, to the surprise of many investors, Lagarde refrained from cutting interest rates. She did not follow the US Federal Reserve and the Bank of England, who slashed interest rates by half a percentage point in recent days to cushion their economies from the crisis.  According to the ECB, EU interest rates are “already low and further cuts are unlikely to help”.

 





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