ECB withdraws 35 billion euros from market

FRANKFURT – The European Central Bank withdrew 35 billion euros (N$350 billion) from the market yesterday in its first withdrawal since injecting more than 200 billion euros in the wake of the US credit crisis.

The ECB made the move in its weekly refinancing operation. The bank made the cash injections to maintain liquidity faced with the subprime crisis in the US home loans sector.It has indicated it will raise its key refinancing rate in September by a quarter of a point to 4,25 per cent, but that pledge has been overtaken by the turbulence on markets unleashed by the US crisis.After the US Federal Reserve made a surprise decision last week to make a half-percentage point cut in its discount rate on loans to banks, the markets are watching closely to see what the Frankfurt-based ECB will do.Nampa-AFPThe bank made the cash injections to maintain liquidity faced with the subprime crisis in the US home loans sector.It has indicated it will raise its key refinancing rate in September by a quarter of a point to 4,25 per cent, but that pledge has been overtaken by the turbulence on markets unleashed by the US crisis.After the US Federal Reserve made a surprise decision last week to make a half-percentage point cut in its discount rate on loans to banks, the markets are watching closely to see what the Frankfurt-based ECB will do.Nampa-AFP