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