The Korea Herald


ECB cuts rates to historic low

By 박형기

Published : July 5, 2012 - 21:06

    • Link copied

The European Central Bank cut its key rates to a new all-time low Thursday in a bid to keep up the positive momentum after EU leaders made some progress in solving the crisis at a summit last week.

The ECB's policy-setting governing council voted, as expected, to lower the rate for its main refinancing operations by a quarter of a percentage point to 0.75 percent at the regular monthly meeting here.

The two other key rates -- on the marginal lending facility and the deposit facility -- would also be cut by a quarter point to 1.50 percent and zero percent respectively.

ECB president Mario Draghi was scheduled to explain the reasoning behind the decision at the traditional post-meeting news conference.

Nevertheless, markets had been betting on a cut in order to boost the positive sentiment engendered by the EU summit last week, which delivered more than originally hoped for in moves to break the debt crisis.

ECB watchers were now waiting to see whether the central bank will unveil more of what it terms "non-standard" measures in the fight against the crisis.

A hotly contested programme of indirectly buying up the bonds of debt-mired countries -- known as the Securities Markets Programme -- has lain dormant for 16 weeks now.

The ECB also appears reluctant to embark on further massive injections of liquidity while the effects of two previous ones in December and February amounting to more than 1.0 trillion euros ($1.26 trillion) have still to make themselves fully felt.