The ECB has cut all three of its interest rates and expanded its asset-buying programme in a bigger-than-expected cocktail of actions to boost the economy and stop ultra-low inflation becoming entrenched. David Pollard reports.
Mario Draghi proved he had at least some tools left. A 10 basis points cut in the ECB deposit rate An extra 20 billion euros of QE per month ... And - an extra surprise - a 5 basis points cut in the bank's other main rates. SOUNDBITE (English) MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK, SAYING: "With today's comprehensive package of monetary policy decisions we are providing substantial monetary stimulus to counteract heightened risks to the ECB's price stability objective." The news of even more, cheaper money drove stocks up and the euro down one per cent against the dollar. Good for exporters, no doubt - but low inflation is altogether a different challenge. A minus 0.2 per cent rate seen as a telltale of a monetary policy that IS running short of options. That said, the ECB chief outdid expectations this time. (SOUNDBITE) (English) MIKE INGRAM, MARKET STRATEGIST, BGC PARTNERS, SAYING: "It certainly caught the markets napping. They've been caught full in the face by the ECB's monetary bazooka - perhaps understandable given the train wreck of the December meeting. On the face of it, they've overdelivered." For others, though, the debate must shift away from monetary policy. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "What it can't do is essentially implement the structural reforms that governments have consistently failed to implement over the course of the last four to five years." And along with these new measures, the ECB also revised down both its growth and inflation forecasts. Draghi still with a major struggle ahead, in a euro zone far from firing on all cylinders.