The ECB cut rates in November.
Only three economists expected this.
The central bank elected to lower its benchmark refinancing rate to 0.25% from 0.50%, while the rate on the marginal lending facility was reduced to 0.75% from 1.00%.
The euro is plunging. Right now, it’s trading 1.1% lower against the dollar.
Meanwhile, European stock markets are surging after spending most of the morning in the red. The Spanish IBEX 35 is leading the way, up 1.4%.
Below is the full text of the release:
7 November 2013 – Monetary policy decisions
At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:
The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 0.25%, starting from the operation to be settled on 13 November 2013.
The interest rate on the marginal lending facility will be decreased by 25 basis points to 0.75%, with effect from 13 November 2013.
The interest rate on the deposit facility will remain unchanged at 0.00%.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.
With a persistently appreciating euro and the release of data last week revealing that eurozone consumer price inflation plunged to 0.7% year over year in October from 1.1% in September, a few notable firms (BofA Merrill Lynch, UBS, and RBS) predicted the ECB would cut the refi rate to 0.25% today, while a few others (Morgan Stanley and Société Générale, to name two) thought it would do so at its December meeting.
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