Surprise rate cut announced by ECB

<p>The ECB has surprisingly cut the base rate of interest for Europe.</p>

The European Central Bank (ECB) has surprised global markets and analysts today (November 7th) by announcing another cut to interest rates.

ECB president Mario Draghi explained the decision to reduce rates to a record low of 0.25 per cent – down from 0.5 per cent – is due to the weak economic recovery in the eurozone.

Inflation in the eurozone was recently recorded to have dropped to 0.7 per cent in October and Mr Draghi said this was another reason for the cut to rates by the ECB.

In a press conference, he explained that the eurozone was seeing "weaker than expected economic activity". Mr Draghi added: "Accordingly, our stance will remain accommodative as long as necessary."

Although the fall in the headline rate of inflation had put pressure on the ECB to make a change to its interest rates, analysts had expected Mr Draghi to hold firm for the time being.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.