The European Central Bank’s President Mario Draghi has announced a range of measures to boost the flow of credit and left open the possibility of further monetary easing after cutting interest rates to a new record low of 0.5%. The question remains as to whether the proposed measures will actually achieve anything.
After holding its policy meeting in Bratislava on Thursday, the ECB’s governing council announced that it would reduce interest rates by a quarter-point to 0.5%. It is the first cut since July 2012, shortly before Draghi promised to do “whatever it takes” to save the single currency and calmed markets in what became known as the “Draghi put”.
Howard Archer, of consultancy IHS Global Insight, said: “The ECB’s decision to cut interest rates to 0.5% had looked ever more inevitable as latest data and survey evidence pointed to ongoing and widespread economic weakness across the Eurozone as well as below target and receding inflation.”
This week has seen unemployment rise to a new Eurozone record of 12.1% and Thursday’s latest manufacturing PMI data showed that the region’s economy has continued to stagnate.
“There is nothing here to suggest that manufacturing will turn the corner and stabilize any time soon, putting greater onus on policymakers to act quickly to reinvigorate growth,” said Chris Williamson, chief economist at survey collator Markit.
Weak manufacturing data out of China overnight had already reinforced doubts over the health of the global economy as did weaker-than-expected ADP jobs figures from the U.S. in the previous session.
As of 14:40 pm GMT
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8412
The Euro to US Dollar exchange rate is currently trading in the region of 1.3074
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2759
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5422