ECB throws cash at the sluggish euro zone economy

FRANKFURT Thu Jun 5, 2014 3:35pm EDT

FRANKFURT (Reuters) - The European Central Bank said on Thursday it will offer banks a targeted long-term refinancing operation (LTRO) to persuade them to lend, was preparing to purchase asset-backed securities in future and will discontinue sterilising previous bond purchases.

The decision came after the ECB had cut its main interest rate to 0.15 percent and imposed negative interest rates on banks' overnight deposit.

The measures are designed to offer the euro zone economy stimulus, but stop short of the large-scale effect the ECB could unleash with a big plan of quantitative easing (QE) - money printing to buy assets.

"In pursuing our price stability mandate today we decided on a combination of measures to provide additional monetary policy accommodation and to support lending to the real economy," ECB President Mario Draghi told a news conference.

(Writing by Paul Carrel Editing by Jeremy Gaunt.)

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