The ECB has decided to cut the rate by 25 basis points: the rate on deposits goes from 3.75% to 3.50%, the rate on main refinancing, due to the technical adjustment caused by the new operating framework, drops to 3.65% from 4.25% and for the same reason the rate on marginal lending drops to 3.90% from 4.50%.
ECB ready to adjust all inflation tools to 2%
The Governing Council of the ECB “stands ready to adjust all its instruments within its mandate to ensure that inflation returns to its medium-term aim of 2% and to preserve the smooth functioning of the monetary policy transmission mechanism”. This is stated in the note at the end of the Governing Council. Furthermore, “the backstop to the monetary policy transmission mechanism can be used to counter unjustified, disorderly market dynamics that seriously jeopardize the transmission of monetary policy across euro area countries, thus allowing the Governing Council to better fulfil its price stability mandate”.