European stocks close: stocks closed lower on the ECB’s interest rate decision

Stock indices closed lower on the European Central Bank's (ECB) interest rate decision. The central bank cut its interest rate to 0.00% from 0.05% (this decision was not expected by market participants) and deposit rate to -0.4% from -0.3%. The ECB also expanded its monthly purchases to €80 billion from €60 billion, to take effect in April. Purchases will include non-bank corporate debt. The central bank will launch further four targeted longer-term refinancing operations (LTRO).

The ECB lowered its inflation and growth forecasts. Inflation in the Eurozone is expected to be 0.1% in 2016, down from its December estimate of 1.0%, 1.3% in 2017, down from its December estimate of 1.6%, and 1.6% in 2018. The central bank expects the economy in the Eurozone to expand 1.4% in 2016, down from its December estimate of 1.7%, 1.7% in 2017, down from its December forecast of 1.9%, and 1.8% in 2018.

The European Central Bank (ECB) President Mario Draghi said in a press conference on Thursday that new stimulus measures would help to boost inflation and to support the economic recovery in the Eurozone. He noted that further interest rate cuts were unlikely.

Draghi also said that the slowdown in the global economy and geopolitical risks were the downside risks to the outlook.

The ECB president pointed out that effective structural and fiscal policies should be implemented by government to support the monetary policy.

Indexes on the close:

Name Price Change Change %

FTSE 100 6,036.7 -109.62 -1.78 %

DAX 9,498.15 -224.94 -2.31 %

CAC 40 4,350.98 -74.67 -1.70 %