ECB cutting rate to 0% ‘remains on the shelf’

The ECB stands ready to introduce a negative deposit interest rate and cut the main refinancing rate to 0% to breathe life into the eurozone economy. But for now these options “remain on the shelf”, according to the bank’s president, Mario Draghi.

The main interest rate was kept on hold at the historically low 0.5% at yesterday’s monthly meeting, although the growth forecast for this year was marginally reduced, from 0.6% to 0.5%. There was a slight increase in next year’s growth forecast, from 1% to 1.1%.

Much of the focus prior to the latest meeting was whether the ECB would announce a ‘big bazooka’ to boost lending to the SME sector. Mr Draghi has noted that financial markets across the region remain fragmented.