European Central Bank (ECB) President Mario Draghi (R) and Vice President Vitor Constancio walk after a news conference at the ECB headquarters in Frankfurt, Germany, December 8, 2016. REUTERS/Ralph Orlowski
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The European Central Bank is adding half a trillion euros ($580 billion) in stimulus to the eurozone economy as it hopes to support growth as Europe heads into what could be a tumultuous election year.It will reduce the amount of bonds it buys after March to 60 billion euros ($64 billion) a month from 80 billion euros.Still, the total amount of stimulus is slightly more than if the ECB had extended for only six months at the current rate.Economist Carsten Brzeski at ING-DiBa said the ECB risked sending the impression it was focused on reducing the rate of stimulus – so-called tapering – rather than increasing it.By extending stimulus, the ECB is moving in the opposite direction to that of the U.S. Federal Reserve.Beyond the stimulus program, the ECB's 25-member governing council kept its key interest rate benchmarks unchanged. It left at zero its refinancing rate, at which it lends money to commercial banks, and minus 0.4 percent on deposits it takes from banks. That negative rate aims to push banks to lend money and not hoard it at the ECB.
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