The European Central Bank held an important policy meeting today. The attention of everyone active on the financial markets was entirely focused on the outcome of the meeting, as investors expected the ECB to share more details about how they plan to stimulate the eurozone’s economy.
Meeting the forecasts, the European Central Bank cut its deposit rate from -0.40% to -0.50%. Moreover, the bank said it will support the economy by resuming its bond-buying scheme. It stopped in 2018 but as inflation failed to grow and the risks to the global economy increased (largely due to the trade war between the US and China, as well as the uncertainty with Brexit), the ECB now sees the need to start buying 20 billion euro worth of bonds each month, from November onwards.
As a result of this announcement, European bond debt immediately began rallying, with Italy leading the charge. The news also significantly weakened the euro, even though the events were anticipated by investors.
Right now the interest rate was left unchanged at 0.00%, but this too could be revised in the near future.
