| CATEGORY: INTERNATIONAL ECONOMIC |
Thu 05 Jul 2012
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LONDON (SHARECAST) - The European Central Bank (ECB) has cuts its key interest rate in a bid to boost struggling Eurozone economies.
The rate will fall from 1% to 0.75%, while the bank's deposit rate - the rate of return banks get for leaving money with the ECB overnight - will be cut to zero.
The Bank hopes that this move will encourage banks to lend elsewhere to get a better return, rather than simply dumping money with it.
The decision follows a £50bn increase in asset purchases announced by the Bank of England and the Bank of China cutting its key interest rates.
ECB President, Mario Draghi, said inflation was not the chief threat to the Eurozone, particularly with oil prices falling.
The cut comes despite Eurozone inflation remaining above the ECB's target at 2.4% in June.
He said the main worry was "economic growth in the euro area continues to remain weak, with heightened uncertainty weighing on confidence and sentiment".
"Indicators for the second quarter of 2012 point to a renewed weakening of economic growth and heightened uncertainty," Draghi said.
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