The euro sank today after the European Central Bank fulfilled its promise and slashed interest rates, taking some of them into the negative territory. The shared 18-nation currency is attempting to regain its footing now, slowly crawling back to the opening level.
The ECB announced that it cut its key interest rate on the main refinancing operations from 0.25 percent to 0.15 percent, while the interest rate on the deposit facility was decreased by 10 basis points to -0.10 percent. Additionally, the central bank announced an array of measures to stimulate the economy, including the targeted loans program worth â¬400 billion.
ECB President Mario Draghi was speaking at a press-conference after the meeting, and he made confusing statements about the future policy of the central bank. On one hand, he said:
If required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate should it become necessary to further address risks of too prolonged a period of low inflation.
On the other, Draghi also stated:
Concerning our forward guidance, the key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation.
He also said in response to questions:
For all the practical purposes, we have reached the lower bound.
It is strange that the President expresses a commitment to take all the necessary actions to bolster the struggling economy yet at the same time rules out a possibility of further interest rate reduction.
EUR/USD dropped from 1.3598 to 1.3502 before bouncing to 1.3587 as of 14:06 GMT today. EUR/JPY traded at 139.28 after tumbling from 139.70 to 138.66. EUR/GBP was near 0.8093 following the drop from 0.8123 to 0.8063 — the lowest rate since December 2012.
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