ECB cuts rates to minus 0.3%, extends stimulus

BERLIN — The European Central Bank on Thursday cut interest rates by 10 basis points to minus 0.3% and extended its massive bond-buying program as it attempts to inject life into the eurozone's creaking economy.

President Mario Draghi said the central bank's 60 billion euros ($64 billion) asset-purchase plan would be extended until at least March 2017. He also said it would be broadened to include regional and local debt. The size was not increased.

The rate cut is intended to push the region's bank into making more loans and so support economic recovery. In the third quarter, GDP slipped across the economies of the 19 nations that use the euro currency to 0.3% from 0.4% three months earlier.

"Our decisions reinforce momentum of the euro area’s economic recovery and strengthen its resilience against global economic shocks," Draghi said in a news conference in Frankfurt.

The ECB — Europe’s version of the Federal Reserve — did the opposite of what the Fed is getting ready to do: announce stimulus measures to boost growth and dangerously low inflation. The Fed, led by Chair Janet Yellen, is getting ready to take the so-called punch bowl away and hike interest rates later this month for the first time in nearly a decade.

The policy divergence between the Fed, which is moving toward tighter monetary policy amid an improving job market, and the ECB, which is still in ease mode, is likely to impact markets for the balance of 2015 and beyond.

In European trading, the broad Stoxx Europe 600 index declined 2.4%. Shares in the U.S. turned negative after earlier trading higher. The euro rose sharply against the dollar.

What the ECB does impacts Wall Street, as the more stimulus the ECB delivers, the greater the odds the U.S. dollar will strengthen vs. the euro and other currencies, a shift that will crimp sales and profits of U.S. multinationals.

The ECB's stimulus plans, therefore, could complicate the Fed’s rate-hike timetable, as higher U.S. rates relative to rates around the globe hurt U.S. competitiveness.

Inflation across the economic bloc is running at about 0.1% annually. The ECB targets a rate of about 2%.

Hjelmgaard reported from Berlin