ECB cuts interest rates

<p>The ECB has reduced interest rates to 0.5 per cent.</p>

The European Central Bank (ECB) has confirmed it has cut European interest rates from 0.75 per cent to 0.5 per cent, a new record low for the institution.

Analysts had predicted the move ahead of the announcement today (May 2nd) and there is already speculation there could be a further rate cut in the coming months.

It was also confirmed by the ECB that the interest rate on the marginal lending facility will be decreased by 50 basis points to one per cent and this is due to take effect from May 8th.

Meanwhile, the ECB revealed that the interest rate on the deposit facility will remain unchanged at zero per cent for the time being.

Commenting on the interest rates cut at a news conference this afternoon, ECB president Mario Draghi explained "weak economic sentiment has extended into the spring of this year".

He added: "The cut in interest rates should contribute to support a recovery later in the year."

A Reuters poll of 76 economists taken recently resulted in a slim majority forecasting a cut to interest rates at today's meeting.

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