ECB cuts refi to zero, deposit rate by 10 bps, expands QE

    The European Central Bank (ECB) cut its key interest rates, including the benchmark refinancing rate, while it also expanded by 20 billion euros a month and widened its asset purchase program to include euro-denominated bonds by non-bank companies.
    In a statement issued prior to a press conference by its president, Mario Draghi, the ECB said its governing council had decided to cut the benchmark refinancing rate by 5 basis points to 0.0 percent, cut the deposit rate by a further 10 basis points to minus 0.40 percent and the rate on its marginal lending facility by 5 points to 0.25 percent, with all the new rates taking effect March 16.
    The ECB’s monthly asset purchase program, known as quantitative easing, will be expanded to 80 billion euros a month starting in April from the current schedule of 60 billion a month.
   In December last year the ECB extended its asset purchases by six months to the end of March 2017 or even beyond if necessary to ensure that inflation heads towards the central bank’s target of below, but close to 2 percent.
    The asset purchase program was also widened in scope to include investment grade bonds in euros issued by non-bank companies based in the euro area.
    The final part of the ECB’s aggressive new easing comprises a new series of longer-term refinancing programs, named TLTRO II. Four new lending operations, each with a maturity of four years, will be launched, starting in June, with rates as low as the ECB’s deposit rate.

   
 
    The European Central Bank issued the following statement: