Monday, November 10, 2008

ECB cuts interest rate to fight recession

Special Report:Global Financial Crisis






The European Central Bank has cut its key interest rate by 50 basis points to 3.25 percent.



The move comes as the euro zone economy faces its first economic recession.











Jean-ClaudeTrichet,PresidentoftheEuropeanCentralBank(ECB)addressesthemediaduringhismonthlynewsconferenceattheECBheadquartersinFrankfurt,November6,2008.REUTERS/KaiPfaffenbach



Jean-ClaudeTrichet,PresidentoftheEuropeanCentral
Bank(ECB)addressesthemediaduringhismonthlynews
conferenceattheECBheadquartersinFrankfurt,
November6,2008.REUTERS/KaiPfaffenbach



Thursday's cut took the ECB's benchmark rate to a two-year low of 3.25 percent, reflecting the euro zone's sharply deteriorating economic outlook and easing inflation pressures.



ECB President Jean-Claude Trichet said the move aims to breathe life into the euro zone economy amid fears of recession.



He said the ECB's Governing Council would continue to monitor developments in the difficult months ahead.



Jean-Claude Trichet, President of European Central Bank, said, " The Governing Council will continue to keep inflation expectations firmly anchored in line with its medium term objectives, in so doing it supports sustainable growth and employment and contributes to financial stability. Accordingly we will continue to monitor very closely all developments over the period ahead."



Euro zone inflation fell to 3.2 percent in October, after peaking at 4 percent over the summer. The figure is still far above the ECB's ceiling of two percent.



Trichet called on all banks to take into account the support measures being adopted by governments worldwide to deal with the current financial turmoil.



Besides ECB, the Bank of England slashed its key interest rate by a third, to 3 percent, taking Britain's interest rate to its lowest level in more than half a century.



The Swiss central bank followed suit, with an emergency half-point cut.









No comments: