The European Central Bank is easily portrayed as stubborn and inflexible.
But Wednesday’s governing council meeting produced a significant change: a cut in its main interest rate below 1 per cent — more-or-less ruled out during the 2009 recession — was put firmly on the agenda for July’s meeting. Like other central banks, the ECB appears headed towards the “zero bound”, the floor at which policy rates can move no lower.
Does that mean the ECB is moving closer to US or UK style “quantitative easing” to boost the economy when rates cannot be cut any further? Possibly, but not necessarily. Read more