The European Central Bank (ECB) announced another program to stimulate bank lending in the euro zone on Thursday, as well as pushing back the timing of its first rate hike.
"A new series of quarterly targeted longer-term refinancing operations (TLTRO-III) will be launched, starting in September 2019 and ending in March 2021, each with a maturity of two years," the central bank said in a statement.
The TLTROs are loans that the ECB provides at cheap rates to banks in the euro area. As a result, lenders are able to provide better credit conditions to customers, which in turn stimulates the real economy.
TLTRO III is the third injection of stimulus of this kind from the ECB. If commercial banks lend this money onto the real economy, they then receive cash rather than having to pay interest on the loans.
This mechanism was introduced for the first time in 2014 and a second time in March of 2016. The central bank's decision comes at a time when there are increasing concerns about growth in the euro zone. The economy continued its lowest pace of growth in four years during the final three months of 2018, data showed in January.
ECB President Mario Draghi also cited a series of external risks as a reason for the new measures.
"The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment," Draghi told reporters Thursday.