As expected – the ECB cut interest rates today by 0.5% . The cut means that rates are now at just 2%. The new rate comes into effect on Jan 21st 2009. The cut was widely predicted by economists, and followed the Bank of England’s decision last week to reduce rates by half a percentage point to 1.5pc – the lowest ever level in the UK. Economists are predicting further rate cuts to follow in the eurozone.
The ECB had been considered to be less willing than other central banks, including the Bank of England and the US Federal Reserve, to cut rates, but recent bad economic figures are likely to have prompted today’s decision.