European Central Bank Slashes Rates by 50bps
March 5, 2009
Today witnessed the European Central Bank (ECB) cut rates by a further 50bps, leaving rates at a historic low of 1.50%. In addition the ECB revised their expectation for growth in 2009 suggesting that the economy could contract between 2.2 and 3.2%. During the Q&A session ECB Governor Trichet suggested that the European Union faced the very real possibility of deflation. Unlike other central banks the ECB did not signal a move towards quantitative easing instead preferring to use monetary policy as the primary tool to stimulate the ailing European economy. The Euro fell versus the US Dollar after the announcement as the market speculated that further rate lay ahead.