Businesses to benefit from “bold and unusual” ECB measures, including negative interest rate

The European Central Bank (ECB) has reduced the deposit rate for banks to -0.1%, as part of a package of unprecedented measures to help stimulate the European economy.

The negative interest rate should discourage banks from hoarding money and encourage them to lend to businesses.

A €400bn lending programme was also unveiled by ECB boss Mario Draghi, which offers cheap finance for banks as long as they lend it to companies outside the financial sector and don’t use it for mortgages.

The ECB governing council hope to inject life into the Eurozone’s struggling economy, after last quarter’s GDP figures show it would have shrunk had it not been for a strong performance from Germany.

Howard Archer, chief UK and European economist at IHS Global Insight told the BBC: “Despite being widely anticipated and in some quarters criticised for occurring too late, it is still a bold and unusual move by the ECB to take its deposit rate into negative territory.”

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