ECB cuts interest rate and expands stimulus

The European Central Bank has cut a key interest rate and extended its stimulus programme to bolster the 19-country eurozone economy - but the actions underwhelmed investors, who pushed stocks sharply lower.

The main move by the ECB was to cut the interest rate on deposits from commercial banks from -0.2% to -0.3%.

That is intended to push banks to lend by imposing a penalty on the cash they park at the central bank. Many in the markets, however, had predicted a bigger cut to -0.4%.

And alongside other measures, ECB president Mario Draghi said the bank will extend the duration of its bond-buying programme, which aims to make borrowing cheap in the wider economy.

Mr Draghi said the programme, which was due to run at least through September 2016, is now intended to run until March 2017 or beyond if necessary. Though the program has been extended, which will increase the size of the overall stimulus from the previous €1.1 trillion, the monthly cap of €60 billion in purchases was maintained.

"Today's decisions were taken in order to secure a return of inflation rates towards levels that are below, but close to, 2% and thereby to anchor medium-term inflation expectations," Mr Draghi...