The ECB expectedly cut its Deposit rate to minus 0.3%


Moscow. December 3. The European Central Bank in its December meeting reduced the Deposit rate from minus 0.2% to minus 0.3%, the Bank said. The base rate on loans was left unchanged at 0.05% per annum, the rate on margin loans to 0.3%.

The decision of the Bank coincided with expectations of analysts surveyed by Bloomberg.

It is also reported that the ECB President Mario Draghi will announce new stimulus measures during a press conference which will start at 16:30 GMT. In his speech, he will release new macroeconomic forecasts for the Eurozone economy.

It is noted that the extension of the incentives in one form or another was expected by all analysts participating in a Bloomberg survey, with two-thirds of predicted and reduced the rates on deposits, and the renewal of the program of quantitative easing (QE), and an increase in the monthly volume of asset purchases under this program.

The experts noted that this complementary action, because at the moment, QE has several limitations – in particular, the ECB cannot buy husbandy with a yield lower than interest rates on deposits and yield less than minus 0.2% have about 12% of the bonds of the Eurozone countries. As a result, the rate cuts will help to increase the amount available to purchase securities, which may be important if the Central Bank intends to expand its stimulus program.

Overall, the increase in incentives is necessary because the rate of growth of consumer prices in the Euro area are kept at close to zero level. As it became known on Wednesday, consumer prices in November rose by 0.1% compared to the same month last year, while analysts surveyed by Bloomberg, expected to increase 0.2%.

On news about reduction of Deposit rates, the Euro strengthened growth, rising by 16:00 GMT by 0.6% to $1,0675, whereas before the announcement of the size of the drop rate reached 0.6% in comparison with level of environment.

The composite index of the largest companies of Western Europe Stoxx Europe 600, which had enjoyed earlier in the session growth is 0.9%, to 15:47 Moscow time has decreased on 0,2% – to 383,45 item.