ECB cuts deposit rate to -0.30% as expected, other rates unchanged

The European Central Bank cut the deposit rate by 10 basis points to -0.30% on Thursday, as expected by analysts, in an effort to address prolonged weak inflation.

The central bank left other rates unchanged including interest rates at 0.05% and the marginal lending facility at 0.30%, which came as no surprise to the market.

At the press conference after the policy announcement, President Mario Draghi said the ECB would extend its asset purchase programme to March 2017 from September 2016. However, the ECB left monthly purchases at €60bn, missing forecasts of €75bn.

The ECB has been under pressure to take action to lift inflation back towards its target of just below 2%. In a preliminary estimate on Wednesday, the Eurozone consumer price index held at 0.1% growth year-on-year in November, missing forecasts of 0.2%.