ECB takes raft of new steps to avoid deflation-Exportimes ECB takes raft of new steps to avoid deflation-

ECB takes raft of new steps to avoid deflation

Date : 2016-05-13 | From : Xinhua

The European Central Bank has unveiled a bold package of measures, including rate cuts and cheap, long term loans for businesses, to bolster the 18-country eurozone’s economic recovery.

"We decided to lower the interest rate on the main refinancing operations of the euro system by 10 basis points to 0.15% and the rate on the marginal lending facility by 35 basis point to 0.40%." Mario Draghi, president of ECB, said.

The ECB also decided to take the untested step of imposing a negative interest rate on money that banks deposit with it, cutting the rate from zero to minus 0.1 percent. That means the ECB will now charge banks for those deposits. The ECB president said the rate cut was among a combination of measures to provide additional monetary policy accommodation and to support lending to the real economy.

Consumer prices rose by just 0.6 percent in the eurozone in May. There are worries that very low inflation could snuff out the weak recovery and tip the economy into a downward spiral. Draghi said ECB policy makers are in agreement about pursuing further unconventional measures to boost inflation, if it stays too low.

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