ECB rescue: less to it than meets the eye

Mario Draghi surprised markets with a round of stimulus measures - but it was a far cry from full-blown money-printing.

"You can't say Mario Draghi isn't doing his part," says The Wall Street Journal. The president of the European Central Bank (ECB) surprised markets last week with another round of interest-rate cuts and promises of more monetary stimulus to ward off deflation and bolster growth. He cut the ECB's main lending rate from 0.15% to 0.05%.

He also increased the negative deposit rate the rate banks pay for holding deposits at the central bank from -0.1% to -0.2%. Banks are typically paid interest for depositing money with a central bank, but the ECB has made the rate negative so that banks are effectively paying it to park money there. This was done to spur bank lending.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.