The European Central Bank has cut its key interest rates to all-time lows in a largely unexpected move in the face of deflationary pressures in the eurozone.
The ECB cut its central "refi" or refinancing rate by a quarter of a percentage point to a new record low of 0.25 per cent at its monthly policy meeting, it said in a statement on Thursday.
While speculation of a possible rate cut had surged after eurozone inflation slowed unexpectedly to a four-year low of 0.7 per cent last month, most ECB watchers had thought the bank would keep its gunpowder dry for the time being.
The central bank also trimmed another key rate, the interest rate on its marginal lending facility by 0.25 percentage point to 0.75 per cent.
But it held the interest rates on its deposit facility at zero, instead of taking it into negative territory for the first time.
ECB chief Mario Draghi is scheduled to explain the reasoning behind the move at a news conference later.
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