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ECB prepares package of rate cuts

The European Central Bank is preparing a package of policy options for its June meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and medium-sized firms (SMEs).

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Mario Draghi

The European Central Bank is preparing a package of policy options for its June meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and medium-sized firms (SMEs).

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People familiar with the measures being prepared detailed plans involving a potential rate cut, including the ECB's deposit rate going negative for the first time, along with the targeted SME measures.

The package offers some stimulus for the euro-zone economy but falls short of the large-scale effect the ECB could unleash with a major programme of quantitative easing money printing to buy assets. Such a plan is still some way off.

A June rate cut is "more or less a done deal", one of the sources said.

ECB executive board member Peter Praet also told German weekly newspaper the central bank could cut its deposit rate into negative territory as part of a package of policy measures that could also include a targeted long-term refinancing operation.

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The latter is a method of boosting bank liquidity in the euro zone with an eye to increasing lending.

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