"For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points", the ECB said in a statement.
India's central bank on Thursday lowered its benchmark interest rate for the third time this year, coming just after Prime Minister Narendra Modi's election victory and amid growing speculation that the European Central Bank (ECB) and U.S. Federal Reserve will make similar moves in the coming months.
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European lenders had a torrid day, flipping into negative territory and ending 1% lower, as the ECB did not detail as generous a cheap loan lending programme for banks as investors had expected.
"We have seen an impressive rally in core bond markets, especially U.S. Treasuries, indicating that investors anticipate rate cuts soon", said KBC rates strategist Mathias van der Jeugt.
Growth projections by the central bank were revised up to 1.2% for this year but marked down to 1.4% for both 2020 and 2021.
"Several members raised the possibility of further rate cuts".
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Such figures mean the ECB's years of interventions have made only inching progress toward its inflation goal of just below 2.0 percent.
The ECB will try at Thursday's meeting to give the ailing euro zone a boost and may even set the stage for more action later this year as an escalating global trade war unravels the benefits of years of monetary stimulus. Rising external risks have caused the Governing Council to clearly signal its dovish bias.
However, he explained that the ECB's top body did not asses the contingency measures that may be needed to mitigate the consequences of further rate cuts or new assets purchases.
The long-term loans to banks will start in September and initially be priced at the main refinancing rate plus 0.1 percentage point.
Market-based inflation expectations are at their lowest since 2016, a trend that Draghi said policy makers take seriously, while stressing that there is no threat of deflation and a very low probability of recession.
"The uncertainty about the Brexit negotiations and. about the vulnerabilities of certain emerging market countries which are important, and more generally the uncertainty about global trade growth, have extended beyond what we believed in March and that is why we have extended our forward guidance", he said.
-With assistance from Zoe Schneeweiss, Jana Randow, Fergal O'Brien, Catherine Bosley, David Goodman, Jill Ward, Piotr Skolimowski and Milda Seputyte.