Euro falls as ECB cuts and extends asset purchases

The European Central Bank has announced that it will continue to taper its the size of its asset purchase programme, albeit while extending it until September of next year.

By way of an immediate reaction, as of 1322 BST the single currency was falling by 0.56% to 1.1749 against the US dollar.

As expected by many economists, rate-setters in Frankfurt opted to halve the pace of quantitative easing from €60bn-worth of assets each month to €30bn, starting from 1 January 2018.

In parallel, they were now due to run for a further nine months from that date "or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim."

If necessary, the ECB also said it stood ready to increase the size of the APP again.

As for the central bank's main policy rates, that for the main refinancing operations was kept at 0.0%, while those on the marginal lending facility and deposit facility were steady at 0.25% and -0.40%, respectively.

The ECB also reiterated that "the Governing Council continues to expect the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases."

That, in effect, meant any increase in rates would have to wait until 2019 at the earliest.