ECB cuts interest rate to prop up sluggish eurozone economy

The European Central Bank has intervened to prevent a sharp slowdown in the eurozone economy with its first back-to-back interest rate cut since the euro crisis in 2011.

- Phillip Inman

With Germany on the brink of a recession and inflation tumbling across the 20-member single currency bloc, the ECB followed a reduction in the cost of borrowing at its previous meeting in September with a further 0.25 percentage point cut in its key deposit rate to 3.25%.

Marking the third interest rate cut this year, Christine Lagarde, the ECB's president, said the fall in inflation had surprised the central bank and meant a cut was needed to ensure a soft landing for the eurozone economy.

Figures out earlier yesterday revealed that annual prices growth in the eurozone had eased last month to 1.7%, down from 2.2% in August. Lagarde said there were clear signs from most measures of business and consumer activity that the economy was weakening.