European Central Bank President Mario Draghi announced Thursday that the bank will step up its efforts to boost the region's weak economy. Despite the bold announcement, markets were disappointed by the size of the stimulus, hammering U.S. and European stocks and driving up the euro against the dollar, according to The Wall Street Journal.
Draghi stated that the ECB is set to cut interest rates by 10 basis points to minus 0.3 percent. It is also set to extend it massive, $64 billion asset-purchasing plan until March 2017. The president further emphasized that that bond-buying program would be broadened in order for it to adequately include regional and local debt.
"Our decisions reinforce momentum of the euro area's economic recovery and strengthen its resilience against global economic shocks," Draghi said, according to USA Today.
The ECB's decision on Thursday stands in stark contrast to the decision of the U.S. Federal Reserve, which, according to Chairperson Janet Yellen, is getting ready to take the so-called punch bowl away and hike interest rates for the first time in nearly 10 years.
Hence, a policy divergence between the ECB and the Fed emerges, with the European Central bank keeping up with the status quo and its American counterpart moving towards a tighter monetary policy amid an improving job market.
The difference between the two financial behemoths' policies might very well impact the market balance of 2015 and beyond.
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