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This is a modern day experiment in central banking to discourage banks from hoarding cash. One of the key intentions of the rate move is to encourage bank lending, which would have a resulting impact on spending, economic growth and inflation.

A further impact of the cut should be to lower the value of the euro and make EU exports more competitive, a big win for European exporters.

The European economy has really not kick-started after the 2008 recession and quite to the contrary, has experienced a ripple effect of economic setbacks.

It may come as a surprise to many investors that the Euro Stoxx 50 index is up 5.5% year-to-date and 21.6% in the past 52 weeks, after posting a 26.0% increase in 2013. It’s important to know that negative headlines don’t necessarily mean that stocks are going down, or that they are going to go down. Quite to the contrary, sometimes such events can prove positive for stock returns.

So what does this mean for Canadians? I’d say there are important lessons for borrowers (some of us) and investors (most of us).

Borrowers have got to wonder if low rates are here to stay or if they could get lower. Maybe 2.99%, 5-year fixed rate mortgages aren’t such a good deal after all? If rates are falling elsewhere, why not here?

The other side of the coin is to consider the fact that the ECB has lowered rates because they’re concerned about deflation, a decrease in prices where inflation actually goes negative. Deflation increases the real value of debt, making it harder to pay back debt when prices, incomes and asset values are declining. And given the precariously high debt levels in Canada, deflation could be particularly difficult if it ever came home to roost.