ECB cuts interest rate to counter recession

Special Report:Global Financial

Crisis

BERLIN, March 5 (Chinese media) -- The European Central Bank

(ECB) on Thursday cut its key interest rate by a half percentage point to 1.50

percent to counter the economic slowdown in the euro zone.

Besides the key rate, the ECB also cut the interest

rate on the marginal lending facility by 0.50 percent to 2.50 percent and cut

the interest rate on the deposit facility by half to 0.50 percent.

"Euro area real GDP contracted markedly in the fourth

quarter of 2008, by 1.5 percent on a quarterly basis," ECB resident Jean-Claude

Trichet said at a press conference.

European Central Bank (ECB) President

Jean-Claude Trichet speaks at a conference on financial regulation in

Paris Feb. 23, 2009. The European Central Bank (ECB) on Thursday cut its

key interest rate by a half percentage point to 1.50 percent to counter

the economic slowdown in the euro zone.(Chinese media/Reuters Photo)
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"Available data and survey indicators suggest that

economic activity in the euro area remained weak in early 2009." he said.

Trichet said inflation rates have decreased

significantly and are now expected to remain well below 2 percent over 2009 and

2010,while both global and domestic demands would still decline in 2009,as the

global slowdown becomes worse.

He stressed the importance of "an open market economy

with free competition," saying "it is of the utmost importance to avoid

protectionist measures."

"Refraining from protectionism will be key to

allowing the global economy to overcome the current crisis more rapidly," he

said.

This is the fifth time in six months for the ECB to

cut rates to counter economic slowdown, sending the ECB's key rate to a record

low.

Earlier in the day, the Bank of England (BOE),

Britain's central bank, also cut its key rate by 0.50 percentage point to 0.5

percent.

Trichet has been reported to be reluctant to follow

the lead of the Federal Reserve and the BOE, which have cut rates toward zero

and turned to other policy tools, fearing the broad axe may bring a future

crisis.

However at the press conference, Tricht said the

governing council of the ECB was still "open to any measure" considering the

uncertainty of future economic development.

Eurozone economy records worst

contraction in Q4

BRUSSELS,

March 5 (Chinese media) -- The eurozone economy contracted by 1.5 percent in the fourth

quarter of 2008, compared with the previous three months, the European Union

(EU)'s statistics bureau Eurostat said on Thursday, confirming a previous

estimate.

It was the deepest quarter-on-quarter contraction for the

euro zone since the single currency club came into being in 1999, marking the

third successive quarter of negative growth.

Bank of England cuts rates to record

low

LONDON, March 5 (Chinese media)

-- Bank of England, Britain's central bank, announced today it will cut interest

rates from 1 percent to 0.5 percent, a new record low, with the aim of reviving

the British economy.

The bank said it will adopt a "quantitative easing"

monetary policy to create 75 billion pounds (about 105 billion U.S. dollars) to

buy government bonds and company securities in an attempt to boost bank lending.

The bank expects it will take up to three months to carry out this programme.

Denmark cuts interest rate by 0.75

percentage points

STOCKHOLM,

March 5 (Chinese media) -- Denmark's central bank Nationalbank announced Thursday that

it had decided to cut its lending rate, according to reports reaching here from

Copenhagen.

"The lending rate and the rate of interest on certificates

are lowered by 0.75 percentage points to 2.25 percent. The discount rate and the

interest rate on the banks' current accounts with Nationalbank are lowered by

0.75 percent to 2.75 percent. The reduction will have effect as from March 6,

2009," said the bank in a statement.