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ECONOMY

ECB joins concerted worldwide rate cuts

The European Central Bank cut its main lending rate by half a percentage point to 3.75 percent on Wednesday in a concerted effort with the world's leading monetary authorities to stem the growing global financial crisis.

ECB joins concerted worldwide rate cuts
ECB President Trichet cuts rates un petit peu. Photo: DPA

The decision was taken in coordination with central banks in Britain, Canada Sweden, Switzerland and the United States, the ECB said in a statement.

The ECB, which sets monetary policy for 15 EU members including Germany, also said that “the Bank of Japan expresses its strong support of these policy actions” although Tokyo did not take part in the joint action which followed unprecedented moves in Washington and London to battle the crisis.

Noting that “inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices,” the ECB said it had also reduced its other two key rates by the same amount.

The ECB’s marginal lending rate was cut to 4.75 percent and the interest rate on the ECB’s deposit facility fell to 2.75 percent. These are rates at which commercial banks can borrow from, and place money on deposit with the central bank, respectively.

“Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets,” the ECB statement said.

Central banks have pumped massive amounts of cash into interbank money markets to ensure that the critical networks did not collapse, but their efforts have met with little success as the credit crunch continues.

MONEY

Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.

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