ECB cuts rates to 0.5 per cent

s expected, the European Central Bank has announced a key interest rate cut from 0.75 to 0.5 per cent. There was also a cut to the marginal lending facility from 1.5 to one per cent. The deposit facility interest rate is unchanged at zero per cent.

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Think tank Open Europe is sceptical as to the efficacy of a rate cut, as the transmission mechanism already appears to be broken:

On the margin it will help reduce costs for those banks which borrow heavily from the ECB and consumers with variable rate loans and mortgages – but the impact will be very limited.

(Open Europe)

There now follows a press conference at 13.30. You can watch it live here.