ECB cut interest rates by 50bps
16 January 2009
The European Central Bank cut its benchmark interest rate by 50 basis points last night, its fourth successive reduction, but indicated it would pause for breath in February. The central bank cut to 2.0 percent, to match its lowest ever rate, in line with what markets and most analysts had been expecting.
European Central Bank President Jean-Claude Trichet said the recent flurry of rate cuts was not necessarily over, saying 2 percent was not a floor for ECB rates, although with the next meeting only 3 weeks away he played down the chances of another move so soon.
"Our next important rendezvous for monetary policy will be our March meeting, where we will have substantial elements of new information." Trichet said euro zone inflation risks are continuing to diminish and demand will be dampened for a protracted period of time."
"Monetary expansion is moderating further, supporting the assessment that inflationary pressures and risks are diminishing. Both global demand and euro area demand are likely to be dampened for a protracted period. We consider risks to price stability over the medium term to be broadly balanced. This takes into account the latest economic data releases and survey information which add clear further evidence to the assessment that the euro area is experiencing a significant slowdown," Trichet said.