ECB cuts rates and launches stimulus programme

ECB President, Mario Draghi hopes to spur European banks to loan more money

The European Central Bank has cut its benchmark interest rate to 0.05%, and introduced new stimulus measures.

The ECB had earlier cut its rate from 0.25% to 0.15% in June, and also became the first major central bank to introduce negative interest rates.
It will also launch an asset purchase programme, which will buy debt products from banks.
It is hoped this move will add liquidity to the financial system and revive lending.

'Mid-road' The move falls short of a programme of buying government bonds - a process known as quantitative easing (QE), and one which the US Federal Reserve has undertaken.
ECB boss Mario Draghi said that QE had been discussed by the bank.
"Some of our governing council members were in favour of doing more than I've just presented, and some were in favour of doing less," he said.
"So our proposal strikes the mid-road.... a broad asset purchase programme was discussed, and some governors made clear that they would like to do more."
The ECB has been under pressure to kick-start the eurozone economy, as manufacturing output has slowed and inflation has fallen to just 0.3%.

The ECB hopes to increase lending in the eurozone economy

Analysis: Andrew Walker, BBC Economics Correspondent So the ECB is getting back into the business of buying financial assets. No government debt this time, though it's clear that could yet come.
Instead the focus is on assets that bundle up private sector loans.
Does that sound familiar? Yes, it was that kind of stuff that played a central role in the financial crisis, especially mortgage backed securities in the US.
But that market is much less developed in Europe and it could ultimately help the Eurozone deal with another problem: the continued weakness of the banks.
If the market for this type of asset were to expand it would make European business finance a bit more American, with a bigger share of commercial loans coming through the financial markets and less through struggling banks.