European Central Bank cuts rates deeper into negative territory, relaunches asset-purchase program

Turkish Central Bank lowers interest rates 325 bps

Turkish Central Bank lowers interest rates 325 bps

The European Central Bank has unveiled fresh stimulus measures to bolster the eurozone, including cutting a key interest rate.

Thursday's moves also infuriated Trump, who just this week called on the U.S. Fed to adopt a negative-rate policy.

US President Donald Trump tweeted saying "The ECB is trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting US exports".

United States Treasury Secretary Steve Mnuchin told CNBC the European Central Bank rates change came as no surprise to Washington.

"The final showdown has started with a big bang".

The ECB also said it was re-starting quantitative easing.

The deposit facility rate, paid by banks on reserves parked at the ECB, was already negative, but has now been cut from minus 0.4% to minus 0.5%.

They said in a statement that they will cut the bank's deposit rate to minus 0.5 percent from minus 0.4 percent. The ECB changed its guidance on interest rates to say they'll stay at present or lower levels until the outlook for inflation "robustly" converges to its goal of just below 2%.

The "forward guidance" on rates abandons previous language naming mid-2020 as the earliest possible date for a rate hike.

Under the asset-purchasing programme, the bank will from 1 November make €20bn (£18bn) in asset purchases each month in an attempt to pump money into eurozone banks and encourage lending.

"The key point is that this commitment to more QE is open-ended", commented Andrew Kenningham of Capital Economics.

But governors stopped short of committing to the €600 billion of QE that Pictet Wealth Management strategist Frederik Ducrozet said could prove necessary.

Any steps by China and the U.S.to ease tensions ahead of face-to-face talks in Washington in the coming weeks would support sentiment as investors await monetary decisions from more of the world's major central banks. But will it be enough to revive the eurozone's embattled banks and inflation prospects?

The September package aims to buttress the eurozone against the impact of trade wars, especially between the United States and China, as well as weakening emerging markets and a looming no-deal Brexit.

All eyes now on ECB President Mario Draghi's press conference at 12.30 GMT.

Meanwhile, Germany's central bank warned in August that the country, which is considered the economic powerhouse of the bloc, could soon enter a recession.

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