Huffpost Business

ECB Cuts Interest Rate To New Record Low

Posted: Updated:
The headquarters of the European Central Bank (ECB) stands illuminated beyond a euro sign sculpture at night in Frankfurt, Germany, on Wednesday, Nov. 6, 2013. ECB President Mario Draghi must decide whether it's time to use up one of his remaining interest-rate cuts when he announces an interest-rate decision at 1:45 p.m. today. Photographer: Ralph Orlowski/Bloomberg via Getty Images | Getty

FRANKFURT, Nov 7 (Reuters) - The European Central Bank cut its main interest rate on Thursday to a new record low of 0.25 percent, responding to a surprise drop in inflation by easing policy to support the euro zone's weak economic recovery.

The quarter-point cut was largely unexpected and highlights the ECB's concern about the slowdown in euro zone inflation to 0.7 percent in October - a rate far below its target of just under 2 percent.

The euro fell sharply after the decision to $1.3397 from $1.35 prior to the announcement.

The ECB held the deposit rate it pays on bank deposits at 0.0 percent, but cut its marginal lending facility - or emergency borrowing rate - to 0.75 percent from 1.00 percent.

The central bank had faced calls from Italy's finance minister and France's industry minister to ease policy in response to strength in the euro.

Markets now turn their attention to ECB President Mario Draghi's 1330 GMT news conference, at which he will explain the reasoning behind the Governing Council's decision to cut rates.

Also on HuffPost:

World's Richest Countries In 2050
Share this
Current Slide

Suggest a correction

Around the Web

ECB: Key interest rates

ECB: Long-term interest rates

ECB: European Central Bank home page

ECB cuts rates to new low after inflation tumble

European Stocks Extend Five-Year High as ECB Lowers Rate

Euro fights back as ECB looms; Aussie eyes jobs data

ECB expected to keep interest rates on hold despite deflation fears