"Today's decision takes into account that inflationary pressures have continued to diminish, owing in particular to the further weakening in the economic outlook," ECB President Jean-Claude Trichet told a press conference.
"Overall, risks to economic growth remain clearly on the downside. They relate mainly to the potential for a stronger impact on the real economy of the turmoil in financial markets."
The move by Europe's monetary authorities in Frankfurt was largely expected, coming in the wake of several reductions in borrowing costs over the past several months.
The ECB, which set's monetary policy for Germany and the entire eurozone, started to lower interest rates in October as part of coordinated action with the US Federal Reserve and other leading central banks. The ECB last cut its main refinancing rate by an unexpected 75 basis points in December.