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New rate cut on way in bid to boost lending

HOMEOWNERS could be in line for a further ECB rate cut as policymakers are investigating additional measures to boost the flagging eurozone economy.

The move comes as the cut in the rate to 0.75pc did little to jolt banks into lending more money.

The ECB cut its main interest rate last week by a quarter point to a record low. And it reduced the deposit rate it pays banks for parking money with it overnight to zero.

However, the moves don't seem to have had much of an effect. Banks are disinclined to keep cash at the ECB as they will receive nothing for it.

Instead financial institutions responded by simply shifting nearly half a trillion euros out of the ECB deposit facility and into their current accounts at the central bank.

ECB policymakers signalled they could act again faced with fading inflation pressures and no sign banks are about to funnel more money to business to help the stagnating economy.