The ECB lowered their benchmark rate by 25 bps to a record low 1.00% as they view that the global economy remains in a “severe downturn”. The central bank also announced that it will begin to purchase euro-denominated bonds as it joins other central banks in their quantitative easing efforts. Indeed, today we saw the BoE announce that it would add another £50 billion to their efforts. President Trichet stated that the measures were intended to help ease funding for companies as they fear that the labor market may deteriorate further. The committee views that price stability will return over the medium term and that the economy will recover by 2010. The announcement of the non-standard efforts initially sunk the euro, but the single currency has regained its footing as the moves raised optimism for future growth.
