European Central Bank Cuts Deposit Rate to Negative

European Central Bank Cuts Deposit Rate to Negative

The European Central Bank cut its benchmark interest rate to a record low on Thursday and, in an unprecedented attempt to stimulate the euro zone economy, said it would begin charging interest on deposits held by the bank.

The so-called negative deposit rate has never been tried on such a large scale and is a bid to push down the value of the euro and encourage banks to invest excess cash rather than hoarding it in central bank vaults.

The European Central Bank cut its benchmark interest rate to 0.15 percent from 0.25 percent, and the deposit rate to minus 0.10 percent from zero.

Those actions had become all but certain after data earlier in the week showed that inflation in the euro zone fell to an annual rate of 0.5 percent in May, a level considered perilously low.

READ MORE » http://www.nytimes.com/2014/06/06/business/international/european-central-bank-cuts-interest-rate.html?emc=edit_na_20140605