Brussels, 02/04/2009 (Agence Europe) - At its meeting on Thursday 2 April, the Board of Governors of the European Central bank (ECB) decided to further relax its monetary policy. It decided to lower euro area interest rates by 25 basis points. The interest rate on the main refinancing operations of the Eurosystem has been decreased to 1.25%. The interest on the marginal lending facility has fallen to 2.25% and the interest rate on the deposit facility to 0.25%. This is the third reduction this year, after March (-50 basis points, see EUROPE 9855) and January (also -50 basis points). Since October 2008, when the financial crisis began to bite, rates have been reduced by a total of 300 basis points.
“I cannot rule out” the main refinancing rate's being further reduced, said ECB President Jean-Claude Trichet in response to questions from the press. In his introductory speech, he justified the decision to reduce rates by 25 basis points: - there is an expectation that price pressures will remain subdued; - there has been a marked weakening of economic activity. The latest economic data and survey information confirmed that the world economy, including that of the euro area, was undergoing a severe downturn, Trichet said. Both global and euro area demand were likely to remain very weak throughout 2009, before gradually recovering in the course of 2010, he opined. (L.C./transl.rt)