Some analysts had also predicted that the bank will introduce a two-tier deposit rate to support the negative deposit rate.
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“The cut in the ECB’s deposit rate from -0.2% to -0.3% comes as a bit of a relief after incorrect last minute reports (by some media) that it had left rates unchanged”, said Jonathan Loynes, chief European economist at Capital Economics.
The European Central Bank stepped up efforts Thursday to kickstart chronically low inflation in the euro area, cutting a key interest rate and extending its controversial asset purchase program, but financial markets reacted with disappointment.
ASIA’S DAY: Regional benchmarks ended sharply lower, with Japan’s Nikkei 225 dropping 2.2 percent to close at 19,504.58.
According to Mr. Constancio talking to CNBC in Frankfurt, “We have to recognize that the markets got it wrong in forming their expectations”.
For ECB watchers, though, the question was whether Draghi and his colleagues were just holding some ammunition back in case the euro zone economy takes another turn for the worse, or whether his options were now wearing thin.
Even the International Monetary Fund seemed to think European Central Bank policymakers did not go far enough. “The Governing Council will closely monitor the evolution in the outlook of price stability and if warranted is willing and able to act by using all the instruments available within its mandate in order to maintain an appropriate degree of monetary accommodation”, Dragui said at the press conference.
The euro was down just 0.1% against the dollar at $1.09290. For 2017, inflation is seen reaching 1.6 percent, down from the previous prediction of 1.7 percent. Australia’s S&P/ASX 200 retreated 1.5 percent to 5,151.60. Chevron and Exxon Mobil fell the most in the Dow Jones industrial average.
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Britain’s FTSE 100, France’s CAC40 and Germany’s DAX were all down 0.4 percent.
