ECB’s last roll of the dice

Today is a big day in the history of the Eurozone, for three reasons (always good to have the big three).

First an ideological Rubicon has been crossed by the European Central Bank (ECB) - because in trying to cut interest rates and increase the supply of credit in a stagnating Europe, it is engaging for the first time in a form of quantitative easing.

For the avoidance of confusion, its QE will be purchases of private sector bonds - what are known as asset backed securities - rather than government bonds.

But as the president of the European Central Bank, Mario Draghi, said in his press conference today, this bond-purchase initiative is a break with the ECB's history, in the sense that

ECB lowers eurozone interest rates to 0.05%

The European Central Bank has cut its benchmark interest rate to 0.05%.

The ECB had earlier cut its rate from 0.25% to 0.15% in June, and also became the first major central bank to introduce negative interest rates.

After the latest news was announced the euro fell to a one-year low against the dollar of $1.3078.

The ECB has been under pressure to kick-start the eurozone economy, as manufacturing output has slowed and inflation has fallen to just 0.3%.

ECB President Mario Draghi had said after the ECB's last rate cut in June that "for all the practical purposes, we have reached the lower bound".

'Significant'

The new cut may be accompanied later by

Eurozone manufacturing at 13-month low

Manufacturing growth in the eurozone slowed to a 13-month low in August, according to a closely-watched survey.

The final Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dipped to 50.7 in August, down from 51.8 in July. A figure above 50 indicates expansion.

New orders dwindled and factories suffered amid rising tensions between the EU and Russia over Ukraine.

The figures come ahead of the European Central Bank (ECB) meeting on Thursday.

Markets will be looking for a clear plan from the bank to deal with a stalled eurozone recovery, as well as the threat of deflation with inflation standing at just 0.3%.

There is speculation that ECB boss Mario Draghi could offer further indications later this week that he is considering a quantitative easing scheme for the eurozone, similar to those taken by

Eurozone inflation rate nears five-year low

The eurozone inflation rate has fallen to 0.3% in August, near a five-year low, adding to fears of a deflationary spiral, according to Eurostat figures.

The drop, driven by lower food and energy prices, will add to pressure on the European Central Bank (ECB) to take action to stimulate the economy.

Separate figures showed the unemployment rate remained near a record high at 11.5% in July.

The ECB meets next Thursday to decide on interest rates.

Most analysts are not expecting any action yet, but speculation is growing that in the coming months it may inject money into the system, a practice called quantitative easing, in the hope of stimulating growth and pushing up prices.

Mario Draghi, head of the ECB, has previously described inflation at below 1% to be in a

ECB leaves interest rates unchanged

The European Central Bank (ECB) has left interest rates on hold, a month after it cut rates as part of measures aimed at stimulating the eurozone.

In June, the ECB became the first major central bank to introduce negative interest rates.

The bank cut its deposit rate from zero to -0.10% and its benchmark rate from 0.25% to 0.15%.

It also said it would offer long-term loans to commercial banks at cheap rates.

The move is aimed at