PRESS RELEASE

Monetary policy decisions

17 September 2001

Following the terrorist attacks on the US, uncertainty about the US and the world economy has increased. The Federal Open Market Committee has reacted by lowering its target for the federal funds rate today. In concert with this decision, the Governing Council of the ECB met today by means of teleconferencing and took the following monetary policy decisions:

  1. The minimum bid rate on the main refinancing operations of the Eurosystem will be reduced by 0.50 percentage point to 3.75%. Differently from what was communicated in an announcement at 3.30 p.m. today, this change in the minimum bid rate will be effective starting from tomorrow's operation, which is to be settled on 19 September 2001. A new announcement with the revised rates is also being transmitted through wire services.
  2. The interest rate on the marginal lending facility will be reduced by 0.50 percentage point to 4.75%, with effect from 18 September 2001.
  3. The interest rate on the deposit facility will be reduced by 0.50 percentage point to 2.75%, with effect from 18 September 2001.

In the view of the Governing Council, the recent events in the US are likely to weigh adversely on confidence in the euro area, reducing the short-term outlook for domestic growth. As this is likely to further reduce inflationary risks in the euro area, a lowering of the ECB's key interest rates is appropriate. The Governing Council has confidence in the fundamental strength and resilience of the US economic system. Against the background of the sound fundamentals of the euro area, the Governing Council remains confident that the slowdown in economic growth will be short-lived.

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