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EUROPEAN Central Bank president Mario Draghi announced a cut in interest rates today and a new economic stimulus programme.
The ECB slashed its benchmark interest rate from 0.15 to 0.05 per cent, a new record low, in a bid to boost lending and growth in the 18-member state eurozone, where growth has stalled.
The economy stagnated in the second quarter, raising fears of a triple-dip recession.
Mr Draghi said that the bank would also buy asset-backed securities — bonds that can be put together from a wide range of loans made by banks, such as mortgages or loans to companies.
By buying asset-backed securities, the ECB would give banks an incentive to issue more of the loans used to build them and also pump cash into the financial system.
Mr Draghi warned that the ECB alone cannot save the eurozone economy, repeating his call for individual governments to enact structural reforms such as reducing employment security.
