The European Central Bank abruptly reversed course on Thursday by reviving a crisis-era stimulus programme after two years of weaning the eurozone off its easy money policies, a sign of rising concern over the region’s faltering economy.
The decision to make a fresh offer of cheap loans to eurozone banks, which was coupled with a signal it would keep interest rates at historic lows until next year, put the ECB in the camp of major central banks who have made U-turns in recent weeks in the face of mounting risks to the global economy.
In a sign of how concerned ECB policymakers have become, they severely downgraded projections for the eurozone’s gross domestic product growth this year to 1.1 per cent from a forecast of 1.7 per cent just three months ago. Inflation forecasts were also cut, with price rises now set to undershoot the bank’s 2 per cent target all the way out to 2021.