Ivan Camilleri, Brussels
ECB cuts interest rates to 2.5 %
Recession continued to dictate Europe's monetary policy yesterday when the European Central Bank (ECB) announced the biggest-ever interest rate cut in its history, slashing rates by a further 75 basis points to 2.5 per cent from the previous 3.25 per cent.
The decision, intended to boost investment in the present wary international climate, is the third cut in a row in under three months.
In fact, central banks worldwide are cutting interest rates dramatically to stave off a protracted recession.
Just before the ECB decision in Frankfurt, the Bank of England also reduced its rates to 2 per cent and Sweden's Central Bank cut the key interest rate by a record 1.75 percentage points to 2 per cent.
This decision arrived hours after the publication of new EU GDP figures showing that the eurozone is now officially in recession as it posted the second consecutive negative growth in the third quarter.
According to Eurostat, the EU15 average GDP between July and September contracted by 0.2 per cent, similarly to the second quarter.
Malta is not in recession, although GDP figures for the third quarter have not been published yet. However, it is expected to report growth.
On the other hand, big economies influencing the overall eurozone GDP average, such as Germany, Italy, and Ireland, are already in recession and Spain also reported negative growth in the third quarter.
The biggest economy outside the euro area, the UK, is also in recession.
Announcing the latest cut, ECB president Jean-Claude Trichet said that the global economy is likely to remain weak next year as would demand in eurozone countries. He said that turmoil in financial markets could further weaken the eurozone economy.
"The level of uncertainty remains exceptionally high," he said.
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S Pace
Dec 6th 2008, 08:32
It seems all too many times that the Maltese people are getting the short end of the stick and appear complacent with these decisions
Jonathan Camilleri
Dec 5th 2008, 13:33
As, Mr. Sant said, I look forward to the interest rate cuts being passed on to the end-consumer; hopefully the banks won't leave it "hanging" too long.
Jon
Simon Borg
Dec 5th 2008, 13:02
UK banks are being forced by their governments to deliver the BOE's full rate cut. Can't our government do the same? Why should banks be allowed to deliver the rate cut late and not in full? They are preventing the effectiveness of these measures.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5292173.ece
www.thisismoney.co.uk/mortgages/article.html%3Fin_article_id%3D458948%26in_page_id%3D8%26ct%3D5%26in_page_id%3D8&cid=1277721535&usg=AFQjCNFj59xa1355DiwBIOg8MUFzv-MEbg" target="_blank">http://news.google.com/news/url?sa=t&ct=:ePkh8BM9E2IF2mHAKsSpxeqbmFOSaMAixKbF5BoKpNmB1oGMFeLSYktOTsrMyTFgBAkmgQShdmYbCazPjlDovtTv6Rj19vTlFZ9W_WJjSs0BAArPF7s/0-0-1&fp=49394a11d47e57f5&ei=dhY5SYi1NYzK8ASXmdWdCQ&url=http%3A//www.thisismoney.co.uk/mortgages/article.html%3Fin_article_id%3D458948%26in_page_id%3D8%26ct%3D5%26in_page_id%3D8&cid=1277721535&usg=AFQjCNFj59xa1355DiwBIOg8MUFzv-MEbg
E.Falzon
Dec 5th 2008, 13:01
Recession continued to dictate Europe's monetary policy yesterday when the European Central Bank (ECB) announced the biggest-ever interest rate cut in its history, slashing rates by a further 75 basis points to 2.5 per cent from the previous 3.25 per cent.
Last time there was a reduction in the base rate, only BOV reduced it to 3.25 % while Hsbc left it at 3.45%. Hope this time both banks will reduce it to the same rate
Charles Muscat
Dec 5th 2008, 12:59
Makes anyone wonder how the third quarter is expected to report growth, when other countries in a better position then Malta are in recession. I feel sorry for the Maltese who they have to put up with this. This was one of the reasons I left from Malta you will never get to know the truth.
B Sant
Dec 5th 2008, 10:39
Darling said last night that borrowing costs had come down by a total of three percentage points in two months. "This will help people and businesses - and I want to see these cuts passed on."
and our govt??????????
Mario De Bono
Dec 5th 2008, 09:11
If the ECB is reducing the interest rates for small businesses, how come Maltese banks are not doing the same ? How come the regulators, that is, the MFSA and the central bank governor are so tight lipped about this when the governmnet pledged to support banks with out tax money if need be? Are these two individuals so held in thrall by the banks ? Why are they being allowed to get away with it with the ecuse that they are private businesses ? Why this conspiracy of silence in this country? When banks made record profits they resisted a windfall tax on their profits by Government. They were allowed to get away with overcharging for credit card payments. Now they are overcharging on interest rates. Is there an old boy network operating here? And where is Malta's portion of the EIB funds for small businesses?
And why the silence from the Ministry of Finance. And why are newspapers not seeking the same answers I am seeking?