ECB cuts interest rate

By Batuk Gathani

BRUSSELS, MAY 11. In a surprise move, the European central bank has cut interest rates by a quarter or 0.25 per cent, for the first time in more than two years. The decision is taken amid lacklustre economic data in the euro zone region of 12 European Union countries, which show signs of economic slowdown.

The European central bank calls the decision to lower interest rate as a strategy to boost business confidence in the euro zone region.

This is described as an ''adjustment'' rather than ''change in direction'' of central bank's policy.

The European central bank now joins the ranks of U.S. Federal Reserve, Bank of Japan and Bank of England in reacting to a visibly slowing global economy. The central bank's decision yesterday coincided with Bank of England's decision to cut British interest rate by quarter per cent and British interest rate remains 5.25 per cent.

According to current speculation in financial markets, the U.S.. Federal Reserve may again cut the interest rate next week and if so, this will be fifth time this year.

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Section  : Business
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