ECB cuts rates to a record low

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ECONOMISTS last night warned that the European Central Bank’s (ECB’s) decision to cut the eurozone’s interest rates is unlikely to stimulate bank lending to small firms.

The ECB cut its main rate by 0.25 percentage points to a record-low of 0.5 per cent. The widely-expected cut was matched with an extension of unlimited cheap loans to banks and ECB president Mario Draghi left open the possibility of cutting rates even further.

But Chris Williamson, chief economist at Markit, warned: “The cut is a symbolic gesture to reassure struggling eurozone countries that it is actively seeking to revive growth. There is little evidence to suggest the rate cut it will feed through to lower interest rates in the troubled peripheral countries.”