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European Central Bank cuts interest rate

The European Central Bank (ECB) has cut the interest rate to 0.5%, a historical low, now in line with the UK’s own rate.

At a meeting in Bratislava, the Governing council of the ECB took the decision to lower the interest rate from 0.75% on the main refinancing operations of the Eurosystem.

Caxton FX analyst, Richard Driver, said: ’’The 0.25% cut to the refinancing rate was very much in line with expectation, though the cut to the marginal lending rate to 1.0% was a bit more of a surprise.

“It’s been interesting to see the euro actually rally on the news, which isn’t exactly a logical response but some players out there must just be very grateful for some affirmative action from the ECB at last.

“These decisions won’t do much to drag the eurozone out of recession but the move was important for confidence.

“The ECB now needs to do focus on energising the SME sector, as the BoE has attempted to do by expanding its Funding for Lending Scheme.’’

This was posted in Bdaily's Members' News section by Tom Keighley .