ECB Gives Banks 3.4 Billion Euros for Free as Stimulus Steps Up

(Bloomberg) – The European Central Bank gave the region’s lenders 3.4 billion euros ($3.8 billion) in free long-term loans as it revived a policy intended to boost economic growth and inflation.

The three-year loans — at a rate that starts at zero and could fall as low as the deposit rate, currently minus 0.5% — are part of a package of stimulus measures that includes taking negative interest rates further below zero and restarting bond purchases.

The take-up by the 28 banks that took part was far lower than expected. Predictions ranged from 20-100 billion euros.

This is the third series of so-called targeted longer-term refinancing operations, under which the cost of the loans falls if banks lend more to companies and households. The aim is largely to stimulate investment and spending to battle a slowdown caused largely by the U.S.-China trade war and the risk that U.K. is headed for a no-deal Brexit.

Its comes amid a wave of fresh monetary support globally. The Federal Reserve on Wednesday cut its key rate for the second time this year, with Chairman Jerome Powell saying weakness in global growth and trade policy have weighed on the economy. The Bank of Japan left policy unchanged on Thursday while saying it’ll undertake a closer review next month.

The Swiss National Bank kept its negative rate unchanged while offering lenders more exemptions from the policy, which tends to squeeze their profitability. Norway was a standout — raising rates for the fourth time in a year.