The EURO logo is seen outside the European Central Bank (ECB) in Frankfurt/Main, western Germany, on September 4, 2014. AFP PHOTO / DANIEL ROLAND
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Mario Draghi signaled at least 700 billion euros ($906 billion) of fresh aid for his moribund economy and left a fight with Germany over sovereign-bond purchases for another day.With euro-area inflation languishing at 0.3 percent last month, a fraction of the ECB's 2 percent goal, and Draghi saying price expectations are worsening, policymakers unexpectedly cut interest rates. The benchmark and deposit rates were reduced by 10 basis points to 0.05 percent and minus 0.2 percent, respectively. Banks can borrow from the ECB for as much as four years at a small premium to the benchmark rate.Declaring that the ECB can now reduce them no more, Draghi committed to buying so-called asset-backed securities (ABS) and covered bonds in the hope that will funnel cash into an economy which stalled in the second quarter and where lending has been shrinking for more than two years.The covered-bond purchases will revive a measure that the ECB ended in 2012 .The 1.2 trillion-euro market has shrunk more than 40 percent since 2010 and many of the securities are bought by pension funds, insurers and banks that hold them until maturity.
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