European Central Bank cuts key rate, to restart bond buybacks

September's ECB meeting was president Mario Draghi's last

The BOJ is also brainstorming ways to deepen negative interest rates at minimal cost to commercial banks, as it considers adopting it as a main policy response to a slowing economy, sources familiar with the bank's thinking said. And the Fed sits, and sits, and sits.

The ECB is one of five central banks now operating with negative deposit rates, along with central banks in Switzerland, Denmark, Sweden and Japan.

The European Central Bank approved fresh stimulus measures on Thursday to prop up the ailing euro zone economy, cutting rates deeper into negative territory and relaunching an extended bond purchase scheme.

As for bond purchases, which were once suspended in December 2018, the bank said it expects the program to run "for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates".

ECB President Mario Draghi was able to push the stimulus package through the 25-member governing council despite scepticism about the size of the package voiced by several members ahead of time.

The ECB cut deposit rates by 10 basis points to -0.5%, and announced the monthly purchase of Euro 20 billion in bonds.

It marks the second time this year that the United States president has accused the European Central Bank of unfairly driving down the euro.

The bigger-than-expected stimulus will increase pressure on the U.S. Federal Reserve and Bank of Japan to ease policy next week to support a world economy increasingly characterized by low growth and protectionist threats to free trade.

The ongoing spat has dented its manufacturing sector in particular, as factories have been hit by falling orders.

Mr Draghi is due to make way for incoming ECB President Christine Lagarde on 1 November.

Lagarde is set to take the reins on October 31 - the date now set for Brexit.

By 7:10am (AEST), ASX futures were up 24 points or 0.4 per cent.

Sterling was up 0.3 per cent on the dollar this week, on course for its second week of gains after the British Parliament moved to block a so-called no-deal exit from the European Union. The ECB announced a policy package meant to revive the Eurozone economy and to bring inflation back to target.

He said today's announcement "is a reminder to everyone that we are only part way through the recovery following the financial crisis".

The three major US equity gauges advanced after Bloomberg reported that Trump administration officials have discussed offering a limited trade agreement to China that would delay and even roll back some USA tariffs for the first time in exchange for Chinese commitments on intellectual property and agricultural purchases.

'But let's face it, neither of them truly think [exchange rates are the target] and this is more of a case of a central banker being drawn into a political argument that he'd rather steer clear of, ' said Craig Erlam from Oanda.

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