The European Central Bank has cut interest rates in the eurozone to zero.
Its boss, Mario Draghi, implied that rates would remain “low, very low” for at least another year. But he added that “we don’t anticipate that it will be necessary to reduce rates further” unless new facts change the outlook.
The previous rate had been 0.5% and the cut to zero had taken financial markets by surprise.
Draghi also predicted that euro area inflation would stay negative for the coming months. The ECB now predicts inflation in the eurozone will be just 0.1% this year, 1.3% in 2017 and 1.6% in 2018 - all under its desired target of close to 2%.
The ECB has also strengthened its quantitative easing programme in the hope of warding off deflation. This scheme sees the bank pumping money into the European economy by buying bonds from banks.
Now €80 billion will be released every month and has been extended to include bonds from companies as well as governments.
Some economists are hopeful that the raft of measures will be positive for the financial markets as well as the real economy.
