Eurozone struggling to escape liquidity trap

The ECB cut its refi interest rate by 25 basis points to 0.5%, the first reduction in rates since last July when both the refinancing rate and deposit rates were cut by 25 basis points.

With the deposit rate at zero and some resistance within the ECB Council to reducing rates further, the most that was expected at last week’s meeting was a 25bps cut in the refi rate.

ECB president Mario Draghi indicated that there was a very strong prevailing consensus on cutting rates, suggesting that the decision was not unanimous.