(MENAFN- Qatar News Agency) The European Central Bank is expected to announce further measures to stimulate the eurozone economy when its governing council meets on Thursday.
Inflation has continued to fall, putting more pressure on ECB president Mario Draghi to take action, according to the (BBC). The annual rate of inflation now stands at minus 0.2% - even further below the bank's target of just under 2%.
A figure that low underlines the weakness in the economies of the 19 countries that use the euro. The ECB is widely expected to cut the deposit rate for funds from commercial banks even further into negative territory. Such a move is intended to encourage banks to lend more money and boost economic activity in theory.
The deposit rate for funds from commercial banks stands at minus 0.3%, which means they must pay to park money with the ECB, but may be cut to minus 0.4% or even minus 0.5%. The negative rate is regarded as a drastic and experimental move that reveals just how far the ECB is from meeting its inflation target.
The ECB could also expand its bond-buying programme, also known as quantitative easing, which pumps newly printed money into the economy. The bank uses new cash to buy government and some private-sector bonds from banks. That pushes more euros into the banking system in the hope they will be loaned to businesses and consumers. In theory, that should eventually raise inflation and economic activity. The programme could also be extended past its existing March 2017 end date.
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