The European Central Bank has unleashed a bigger-than-expected package of measures to stimulate the eurozone economy, with expanded quantitative easing, incentives to banks to increase lending and further interest rate cuts.

The ECB cut its deposit rate by 10 basis points yesterday to minus 0.4 per cent but eased the impact on banks with cheaper short-term loans and longer-term liquidity at negative interest rates — essentially paying eurozone lenders to increase credit to households and companies.

Mario Draghi, ECB president, said interest rates would stay low for “an extended period” and he kept open the option of a further cut. But he added his voice to growing unease about negative rates among top central bankers, saying he did not anticipate pushing deeper into negative territory, partly because of the impact on banks.