ECB interest rate cut: 'shock and awe' or 'desperation'?

With the Eurozone heading towards deflation, ECB president Mario Draghi finally got out the big guns. Will QE be next?

by Rachel Savage
Last Updated: 05 Jun 2014

The European Central Bank finally rolled up its sleeves today, after months of falling inflation on the continent, and cut its main interest rate from 0.25% to 0.15%. It also slashed the deposit rate to -0.1%, meaning banks will now have to pay to keep cash at the ECB.

With the Bank of England once again holding interest rates at 0.5%, the Euro also fell off a cliff against the pound and dollar (pretty much exactly what the ECB wanted). President Mario Draghi also hinted that he could defy the Germans and go for QE if Eurozone economies don’t miraculously restart – expect more fx fireworks in the coming months.

Here’s what people thought about all the central banking drama:

Some people were surprised

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