ECB cuts rates again as Europe's economy stalls

ECB President Mario Draghi used a speech in Jackson Hole two weeks ago to raise expectations of further central bank stimulus.

LONDON (CNNMoney)

Its main interest rate now stands at 0.05%, its lowest level ever. The ECB also took its deposit rate deeper into negative territory -- charging banks even more for reserves they stash with the central bank.

The measures are designed to breathe life into Europe's faltering economy by making it easier and cheaper for companies and households to borrow money.

ECB President Mario Draghi indicated in a Jackson Hole, Wyo., speech last month that the bank would act to prevent the region from slipping into a vicious circle of stagnation and falling prices.

A fragile recovery in the eurozone has been snuffed out by the crisis in Ukraine, which has hurt trade with Russia and damaged business confidence, as well as a feeble performance by big economies such as Italy and France.

The region also stands on the brink of deflation -- inflation fell to its lowest level last month since October 2009. Falling prices could further depress activity by prompting consumers and firms to postpone purchases or investments.

The ECB cut rates in June and announced a series of other steps to pump more cheap money into the eurozone. Some economists expect Draghi to lay out further measures at a news conference starting at 8.30 a.m. ET, but to stop short of announcing a Fed-style program of quantitative easing.

First Published: September 4, 2014: 8:23 AM ET

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