The West

Markets pound ECB over timid response
Markets pound ECB over 'timid response'

The European Central Bank has cut interest rates to a new record low, but markets have punished what they deem to be a timid response to the eurozone crisis as Greece warned its recovery was off track.

The ECB, at its regular monthly policy meeting, trimmed eurozone borrowing costs by a quarter of a percentage point to 0.75 per cent, in a widely anticipated move.

Shortly beforehand, the Bank of England announced it was keeping its main interest rate at a record low 0.50 per cent and said it would increase its Quantitative Easing stimulus policy by STG50 billion ($A76 billion) to boost Britain's recession-hit economy.

Both decisions had already been priced in by financial markets, so with no more additional measures forthcoming, stock markets and the euro sagged in response.

The gloom only deepened when new Greek Finance Minister Yiannis Stournaras admitted the country's recovery plan was "off-track" in some areas and "difficult years" lay ahead for the crisis-hit eurozone member.

While an ECB rate cut had been seen as a done deal, markets had been hoping the bank might revive its long-dormant program of indirectly buying up the bonds of debt-mired countries - known as the Securities Markets Program.

Another option would have been to launch a third long-term refinancing operations, or LTROs, after two previous ones in December and February amounting to more than one trillion euros ($A1.23 trillion).

But ECB president Mario Draghi poured cold water on such hopes.

In a positive note, Ireland successfully borrowed money on capital markets for the first time in two years, raising 500 million euros in three-month bills in a vital step in its fight to recover from a debt rescue.

The West Australian

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