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European Central Bank slashes key rates for the 6th time

05 March 2009 15:55 (UTC +04:00)

Bakuâ€“ APA-Economics. The European Central Bank (ECB) cut rates for the fifth time in six months Thursday lowering borrowing costs to an historic low and signalled further reductions were likely in the coming months amid a possible negative inflation rate.
After ECB slashed its benchmark level by 0.50% to 1.50 percent, the Bank of England (BoE) cut its main lending rate to 0.50 percent, an all-time low for the 315-year-old institution as well.
With inflationary pressures diminishing and a severe economic downturn having set in, ECB president Jean-Claude Trichet warned that inflation in the 16-member eurozone could slip to ’negative levels’ in the coming months with the recession playing havoc with public finances across the currency bloc.
The ECB has cut its main rate five times from an early October level of 4.25 percent, but at 1.50 percent it is still well above that of other major central banks.
The US Federal Reserve and Bank of Japan’s main rates are essentially already at zero, and the Fed has already begun to buy commercial paper directly from businesses in a classic example of quantitative easing (QE). Agencies