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ECB cuts rates to two percent

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ECB cuts rates to two percent


The European Central Bank has lowered interest rates again.

Differing comments from bank policymakers in recent days had left the financial markets unsure of how deep a cut to expect. In the end the benchmark rate was cut from 2.5 percent to two percent. It was the fourth month running the cost of borrowing in the 16 countries using the euro has been reduced. The ECB feels it can cut as inflation pressures are low – it fell to 1.6 percent in December – and the financial crisis hits the real economy harder. But even with this cut, euro-zone rates are still higher than in other Group of Seven economies, with Britain and Canada at 1.5 percent, and Japan and the US near zero.

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