European Central Bank moves to stimulate economy amid trade tensions
The bank is extending a pledge to keep rates low.
The European Central Bank has launched a new round of monetary stimulus to support economic growth in the face of uncertainties like the US-China trade conflict and Brexit.
The central bank for the 19 countries that use the euro said it would cut the rate on deposits it takes from banks to minus 0.5% from minus 0.4%.
That is a penalty rate that pushes banks to lend excess cash.
It also said it would purchase 20 billion euros a month in government and corporate bonds for as long as necessary.
The purchases pump newly created money into the financial system to lower borrowing costs and raise inflation.
The bank also extended a promise to keep rates at record lows for as long as necessary.
President Donald Trump reacted quickly to the bank’s move in a dig at the US Federal Reserve.
The president tweeted: “European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the Very strong Dollar, hurting U.S. exports…. And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!”
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