New lows for ECB interest rates

The European Central Bank has lowered the interest rate on the main refinancing operations of the Eurosystem by 25 basis points to 0.75%.

In addition, the interest rate on the marginal lending facility will be decreased by 25 basis points to 1.50%.

The interest rate on the deposit facility will fall by 25 basis points to 0.00%. This is the interest rate the ECB pays banks on overnight deposits. The aim is to get banks to lend money rather than holding on to it.

President of the ECB Mario Draghi said that all parts of Europe are now experiencing a weakening of growth, even those countries who were previously in a stronger position. GDP growth in Europe was flat in the first quarter of this year and is expected to be weaker in the second quarter.

Inflation in Europe in May and June was 2.4% and Draghi said it should decline further to below 2% in 2013 but the eurozone economy would only recover gradually.