Euro tumbles as ECB cuts rate and announces asset purchases

The European Central Bank has cut its headline interest rate by ten basis points to 0.05%, prompting the euro to slump against the dollar, and said it will begin a long-awaited asset purchase programme in the coming months.

ECB president Mario Draghi (pictured) announced a surprise decision to cut both the main refinancing rate as well as the deposit rate, which has also been reduced by ten basis points to -0.2%. The euro fell sharply by 1% against the US dollar immediately after the news, trading below $1.30 by 13:40 BST. Draghi then announced the ECB will buy asset-backed securities and covered bonds as part of a so-called 'private quantitative easing' package aimed at boosting lending and liquidity. The central bank continues to hold off from more conventional forms of QE such as purchasing sovereign ...