European stock markets surged and the euro sank on Thursday after the European Central Bank surprised by cutting already ultra-low interest rates to prop up a struggling economy.
Faced with signs of further deterioration in the euro zone’s prospects, the central bank cut all of its interest rates by another 10 basis points to new record lows, putting its deposit rate further into negative territory.
European stock values jumped around half a percent in response .FTEU3, while the euro sank as much as a cent on the day. EUR=
“It’s a surprise. Euro/dollar is getting slammed. The DAX should go up from here,” said Darren Courtney-Cook, head of trading at Central Markets Investment Management.
Sources familiar with the ECB’s discussions told Reuters that officials had also been looking at plans to launch an asset-backed securities (ABS) and covered bond purchase programme worth up to 500 billion euros. The first such purchases, if approved, could be made this year.
Nothing on the asset purchase programme was announced with the bank’s regular policy statement on interest rates at 1145 GMT (0745 EDT). President Mario Draghi gives his regular and more detailed update on the bank’s outlook starting at 1230 GMT.
via Reuters
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