ECB Cuts Rates Further To Support Economy

To shore up the economy from deepening recession, the European Central Bank trimmed its key interest rate by 50 basis points to 2% in its first Governing Council meeting of the year. The reduction was in-line with the expectations of economists. This took the rate to the level last seen in June 2003. The new interest rate will take effect from January 21.

ECB President Jean-Claude Trichet said, “We continue to see global economic weakness and very sluggish domestic demand persisting in the coming quarters as the impact of the financial tensions on activity continues.”

“In the view of the Governing Council, this outlook for the economy remains surrounded by an exceptionally high degree of uncertainty. Overall, risks to economic growth remain clearly on the downside,” Trichet said.