As expected, the European Central Bank announced on 5 June it would lower its main refinancing rate to 0.15 per cent, down from the 0.25 per cent it has been up until now. The Governing Council also made the long-anticipated and controversial move to drop the ECB’s deposit facility rate below zero. From now on, banks can make us of the option at an annual 0.10 per cent interest rate. The measure aims to encourage banks to circulate liquidities instead of letting them rest within the ECB.
“German savers are the victims once again,” writes Die Welt, wondering —
What happens if the ECB’s long-term policy of extremely cheap money leads to nothing? [...] [Savers] will have to get used to the fact that saving is out of date – and this has already been the case for several years due to extremely low interest rates and the depreciation of annual inflation.
For British daily The Financial Times, Draghi “moved as far as he could” to steer the eurozone away from deflation, but doubts monetary policy alone can turn around the eurozone economy:
National governments must also look to their responsibilities. Many eurozone states, notably France, and Italy, need to complete structural reforms to boost competitiveness. Mr Draghi’s able stewardship has lowered bond yields, but this cannot excuse governments from taking the necessary medicine.
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