ECB lowers interest rates to 1.25%

Continuing its efforts to bolster the region's economy, the European Central Bank (ECB) has slashed the interest rates for the 16-nation eurozone by 25 basis points to 1.25 per cent, for the sixth time since October 2008.

However, the cut has been lower than expected, amid the economies in the region battling a ravaging financial turmoil. Interest rates have been cut from 1.50 per cent.

"The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 1.25 per cent, starting from the operation to be settled on April 8, 2009," the ECB said in a statement today.

The apex bank has cut the rates for the sixth time since October 2008. In October last year, the rates stood at 4.25 per cent.

ECB has also slashed the interest rate on the marginal lending facility by 25 basis points to 2.25 per cent. In addition, the interest rate on the deposit facility would be lowered by 25 basis points to 0.25 per cent. Both rates would be effective from April 8.

The jobless rate in the eurozone has climbed to 8.5 per cent in February, reportedly the highest in the last three years.

Recently, the ECB projected that the economic growth in the 16-nation grouping could contract in the range of 2.2 to 3.2 per cent this year.

Many of the world economies including European giants — the UK and Germany — have slipped into recession, broadly defined as two quarters of negative economic growth.

The world's two largest economies — the US and Japan — have already slashed their benchmark rates to nearly zero, in their efforts to bolster their sagging economies.