Europe is easing down the road — quantitatively that is.
In an effort to pull the region out of recession the European Central Bank cut its interest rates to near zero and announced a new stimulus program that involves buying financial assets.
At a meeting on Thursday ECB President Mario Draghi said the central bank would start buying investments called asset-backed securities and covered bonds in October. The measures fall somewhat short of some expectations that the ECB would go for a program buying government bonds, similar to what the Federal Reserve has undertaken.
The moves aim to make credit cheaper at a time when concerns are growing that the economy of the 18-country eurozone might go into reverse. It did not grow in the second quarter, raising fears of a triple-dip recession.
To reflect the downbeat outlook, the ECB cut its growth forecast for 2014 to 0.9 percent from 1.0 percent previously. It lowered its inflation forecast for the year to 0.6 percent from 0.7 percent.
Thursday's news pushed the euro down to $1.2995, its first time below $1.30 since July 2013.
Us Treasury bonds reacted quickly and dramatically with the 10-year note yield hitting 2.38 percent on the surprise move.
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