THE European Central Bank (ECB) unleashed some of its last remaining stimulus weapons late Thursday, cutting all three of its interest rates and expanding asset-buying to boost the economy and prevent ultra-low inflation from becoming entrenched.

    It slashed its inflation expectations for this year but also suggested that interest rates would go no lower.

    In moves that briefly pushed the euro 1 percent down against the dollar, the ECB cut its deposit rate deeper into negative territory and increased monthly asset buys to 80 billion euros from 60 billion euros, above expectations of a hike to 70 billion.

    While the deposit rate was cut 10 basis points to -0.4 percent, the main refinancing rate was shaved to zero from 0.05 percent and its marginal lending rate — used by banks to borrow from the ECB overnight — fell to 0.25 percent from 0.3 percent.

    “Rates will stay low, very low, for a long period of time and well past the horizon of our purchases,” ECB President Mario Draghi, judged to have disappointed markets in December with measures below expectations, told a news conference.

    Purchases are due to end in March next year.

    He added, “From today’s perspective and taking into account the support of our measures to growth and inflation, we don’t anticipate that it will be necessary to reduce rates further.”

    The ECB said it would also start buying corporate debt and launch four new rounds of cheap loan packages, to be extended by banks to the real economy.

    Slashing its 2016 inflation forecast from 1 percent to just 0.1 percent, the bank said further rounds of ultra-cheap four-year loans to banks could include extra financial sweeteners for them to take up the offer to pass on to others.

    “A bank that is very active in granting loans to the real economy can borrow more than a bank that concentrates on other activities,” Draghi noted.

    (SD-Agencies)