ECB cuts rates to 1.50 percent

ECB cuts rates to 1.50 percent
Photo: DPA
The European Central Bank on Thursday cut its main interest rate by 50 basis points to 1.50 percent, as the troubled global economy forced it to lower its growth 2009 forecast for the eurzone.

“The outlook for the economy continues to be surrounded by uncertainty,” ECB President Jean-Claude Trichet told a press conference in Frankfurt. “Recent economic data releases and survey information add further evidence to our assessment that both global and euro area demand are likely to be very weak in 2009.”

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 also announced it now expected the eurozone economy to contract by 2.7 percent this year. The central bank had previously forecast it would shrink only 0.5 percent.

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 50 basis points in January.