After disappointing markets in December with stimulus measures below expectations, the European Central Bank on Thursday announced further rate cuts, more asset-buys, and other measures to prevent the emerging markets slowdown from dampening the eurozone recovery.

“This comprehensive package will exploit the synergies between the different instruments and has been calibrated to further ease financing conditions, stimulate new credit provision, and thereby reinforce the momentum of the euro area’s economic recovery and accelerate the return of inflation to levels below, but close to, 2%,” ECB president Mario Draghi said in prepared remarks.

The Frankfurt-based ECB took the following monetary policy decisions:

  • The main refinancing rate would be decreased by 5 basis points to 0%.
  • The marginal lending rate — used by banks to borrow from the ECB overnight — would be decreased by 5 basis points to 0.25%.
  • The deposit rate would be decreased by 10 basis points to -0.4%.
  • Monthly asset purchases would be increased to 80 billion euros from 60 billion euros.
  • Investment grade euro-denominated bonds issued by non-bank corporations would be included in the list of assets that are eligible for regular purchases
  • A new series of four targeted longer-term refinancing operations, each with a maturity of four years, would be launched, starting in June 2016. The new loans come with incentives for banks to lend “to the real economy.”

“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 said in a later press conference.

Holger Schmieding at Berenberg bank told Reuters that the latest stimulus package was “good news for Europe.”

“Having delivered less than expected in December, the ECB returned to its usual form today and eased policy by a bit more than projected,” Schmieding said.

However, others including Munich Re chief economist Michael Menhart were more critical, warning that such loose monetary policy risked creating asset price bubbles and removed any incentive for governments to reform their economies.

Indeed, the central bank has already spent 700 billion euros buying government bonds and other assets in the past year, but the impact of its quantitative easing has been blunted by tumbling raw materials prices, according to Reuters. On Thursday, the ECB also lowered its 2016 inflation forecast to 0.1% from 1%.

Central banks within the G20 countries are now trying to come up with stimulus measures beyond maintaining ultra-low interest rates and printing money “to shake the global economy out of its torpor,” Reuters said.

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