European Central Bank cuts interest rates for first time since 2016

12 September 2019, 13:12 | Updated: 12 September 2019, 15:10

The European Central Bank (ECB) has cut interest rates for the first time since 2016, while introducing a sweeping stimulus package in an attempt to kick-start a lacklustre eurozone economy and stave off recession.

The central bank announced that it had cut its deposit rate by 10 basis points (BPS) to an all-time low of -0.5%, and will restart quantitative easing at a pace of €20bn (£17.8bn) a month from November.

In a statement, the bank said that interest rates would "remain at their present or lower levels" until it had seen inflation reach acceptable levels.

The euro fell to its lowest level in more than a week on the news. It has since rebounded.

A day after accusing the Federal Reserve of being "boneheads", US President Donald Trump took to Twitter to once again attack the US central bank.

He praised the ECB for acting quickly and cutting rates, writing shortly after the announcement: "They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports.... And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!"

In a press conference following the rate cut, the head of the ECB Mario Draghi urged member states to boost spending in order to inject some life in to the eurozone's economy.

In explaining the ECB's decision, Mr. Draghi pointed to lower inflation forecasts and slowing economies throughout Europe, in addition to the "persistence of downside risks", as factors influencing the bank's decision to cut rates.

Asked to describe the atmosphere at the rate meeting - which was reportedly tense after a number of member states opposed the resumption of QE - Mr. Draghi simply stated that there was "unanimity" on the importance of individual governments stepping up to do more.