Implications of decisions adopted by the ECB on financial markets behind the acronym ECB, you hear again and again in the different messages, the European Central Bank conceals. The European Central Bank runs monetary and currency policy. The essential instrument which the ECB this is available, is the lowering and raising of the federal funds interest rate. If the ECB to lower interest rates, banks on better terms lend themselves to pass on this benefit to their customers. Loans can be included thus about cheaper what cause at the same time, that spent more money and promote the economy. In times of a weakening economy, it comes accordingly every now and again to a reduce of the federal funds interest rate to stimulate consumption. Even in the current financial crisis, cause the ECB has decided to use this instrument to take influence on the economic situation.
It remains to be seen whether this but actually enough positive momentum, can be used. Of course, can There is also the other way around: the ECB can also increase the interest rate. This is especially necessary if inflationary tendencies should be eliminated. The relative stability of prices is indeed very important for a functioning economy. Interest rates are raised, to rise the interest that consumers have to pay if they want to take out a loan. On the other hand, but also the interest of consumers for their savings from the banks get get. An interest rate hike has both a positive and a negative side from the consumer perspective depending on whether one has savings or however want to take out a loan. Sebastian post