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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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ECB announces interest rates cut

Article By: ,  Financial Analyst
June 5, 2014 5:15 PM

The European Central Bank (ECB) has announced a cut to interest rates in a bid to increase economic growth across the struggling eurozone.

As well as a reduction in the benchmark rate from 0.25 per cent to 0.15 per cent, the ECB cut its deposit rate below zero, to -0.1 per cent. ECB president Mario Draghi is expected to announce a raft of measures designed to boost growth at a press conference later today (June 5th).

The eurozone has found the economic recovery to be a sluggish one and while major countries such as Germany have been able to pull away from the problems, it has been a difficult story in nations include Greece and Spain, where unemployment has rocketed.

Euro falls

On the back of the news of the rate cuts by the ECB, the euro hit a four-month low, falling 0.3 per cent for the day to $1.3563, reports the Financial Times. The FTSE Eurofirst 300 was up 0.6 per cent on at 1,381.90 following the announcement by the central bank.

"The market was already positioned for either a ten or 15 basis points cut so it’s not really the key decision – it will be much more important what Mr Draghi has to say about unconventional measures during the press conference later today," said Marco Valli, chief eurozone economist at UniCredit.

Speculation that the ECB would cut interest rates grew earlier in the week when new inflation data showed a fall from 0.7 per cent in April to just 0.5 per cent in May.

Earlier today, the Bank of England's Monetary Policy Committee announced it was holding the UK's base rate of interest at 0.5 per cent – a record low for the country – for another month.

Interest rates in the UK have been at this level since March 2010, shortly before the coalition government came to power, with many industry commentators predicting that a rate rise could occur in mid-2015.

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