After the ECB President had declared a launch of more hawkish accommodative policy to bolster the economic growth, financial markets plunged into turmoil. Mario Draghi’s decision came as a surprise to most market participants. The ECB’s governing council approved three main rate cuts. The headline interest rate has been slashed to just 0.05%, from 0.15% before. Besides, banks are being hit with more costly negative interest rates – they will be charged 0.2% to leave cash at the ECB. The margin loan rate was lowered to 0.3%. Thus, the European Central Bank set the historical lows for three main rates. However, the European regulator added to its hawkish stance by a large-scale purchase of treasury bonds. After the breaking news was published, the euro suffered the most losses. So, the European single currency tumbled to 1.2996 against the U.S. dollar reaching the low since July 2013. The unexpected slump of the euro astonished European stock markets. As for the EUR/RUB currency pair, the euro dropped 33.23 kopecks against the ruble. So, the ruble is trading at 48.2831 versus the euro. Importantly, during the intraday session, the euro sank even lower to 47.85 rubles. “The eurozone is in near deflation and the recovery is not happening. Monetary and fiscal easing cannot resolve the problem on their own. Europe needs its quantitative easing programs like the U.S. Federal Reserve, Bank of Japan, and Bank of England, direct large-scale purchases EU countries’ bonds,” Mr Nouriel Roubini told the Financial Times.
