News / Economy

ECB Cuts Rates to Record Low

President of the European Central Bank Mario Draghi attends a news conference during the Meeting of the Governing Council of the European Central Bank, in Bratislava, Slovakia, May 2, 2013.
President of the European Central Bank Mario Draghi attends a news conference during the Meeting of the Governing Council of the European Central Bank, in Bratislava, Slovakia, May 2, 2013.
Lisa Bryant
— In a move to help ailing eurozone economies, the European Central Bank on Thursday cut its benchmark interest rate to a record low of 0.5 percent, and raised prospects of a further rate cut, if needed.

The move by the European Central Bank was widely expected. Nonetheless, the ECB cut its key interest rate from 0.75 percent to 0.5 percent.

Speaking at a press conference in Bratislava, ECB President Mario Draghi said the cut could help turn around the ailing fortunes of the 17-member euro currency union.

"Monetary and loan dynamics remain subdued. At the same time, weak economic sentiment has extended into [the] spring of this year," he said. "The cut in interest rates should contribute to support prospects of recovery later in the year."

Along with the rate cut, the ECB also has extended cheap loans to banks to encourage them to lend.

Those measures aim to combat a spate of grim economic news, showing sputtering growth and high unemployment rates across much of the eurozone. Thousands of Europeans have taken to the streets to protest tough austerity measures, sparking a debate on whether European governments went too far.

But Draghi defended austerity as a necessary pill for many European economies that would pay off in the long run. He also said many of the reasons for stalling growth were rooted in areas other than monetary policy.

"Many of the problems we see today in competitiveness, in their labor markets, in their tax area, don't have anything to do with monetary [policy]… neither can they be fixed by monetary policy, but can only be fixed by changing what is wrong with these three areas, at least," he said.

A number of experts are skeptical the ECB's moves will be enough to jolt the eurozone out of its slump.

Zsolt Darvas, an analyst at the Brussels-based economic think-tank Bruegel, said the ECB should have cut its rates much earlier.

"I think it won't be enough. I expect the European Central Bank will do more. They may cut interest rates further, to 0.25 percent, but in itself it won't help much. What will be needed is much more forceful action for helping revive credit growth throughout the euro area," said Darvas.

Draghi left open the possibility of a further cut in the main interest rate, saying the ECB will be monitoring the situation closely in the months ahead.

You May Like

Video On the Scene: In Gaza, Darkness Brings Dread and Death

Palestinians fear nighttime raids, many feel abandoned by outside world, VOA's Scott Bobb reports More

African Small Farmers Could Be Key to Ending Food Insecurity

Experts say providing access to microloans, crop insurance, better storage facilities, irrigation, road systems and market information could enable greater production More

University of Michigan Wins Solar Car Race

Squad guided its student-designed solar-powered vehicle to fifth consecutive time victory in eight-day bi-annual American Solar Challenge More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.