The ECB reduce interest rates to 0.5%, a new record low

reunion-bceThe European Central Bank (ECB) has again lowered interest rates by 25 basis points to 0.50%, now at the lowest level since the euro was born over 10 years ago. This is the fourth consecutive decline in interest rates and the first since July 2012. Reducing the price of money was foreseen by the market and comes at a time of weakness in the European economy and low risk of inflation which in April stood at 1.2%. The only restraint with which the ECB counted on were some statements against this cut that arrived a few days ago from Germany. The fall in interest rates just announced by the ECB is good news for all mortgage holders.

Euro strengthens

A short time ago everyone was scrambling to dump all euro holdings as the euro crisis showed no signs of abating. Looking at the recent rise in the single currency, you would think that everything had been sorted out in the debt crisis region, with EUR/GBP hitting a nine month high with 0.8325 printed.

Against the dollar there were also more gains for the single unit as $1.34 was briefly hit.  The 17-nation euro rose to the strongest in more than a year versus the franc, again amid easing concerns about the European debt crisis. European Central Bank President Mario Draghi said on January 10th that the euro-zone economy will slowly return to health in 2013 as the region’s bond markets stabilize.