ECB unexpectedly lowers interest rate

Added by Erik West on November 3, 2011

The European Central Bank (ECB) unexpectedly lowered the key eurozone interest rate by 25 basis points from 1.5% to 1.25% on Thursday.

The interest rate reduction comes amid Mario Draghi’s appointment to the role of the ECB’s President earlier this week. Draghi is expected to hold his first press conference as the head of the ECB later today.

Draghi replaces the former head of the ECB, Jean-Claude Trichet, who held the post for eight years.

Trichet has said that the ECB’s primary role is to keep inflation under control, with the eurozone’s current rate of inflation at 3%, well above the ECB’s target rate of just under 2%.

The ECB announced one year emergency loans last month and stated it would buy €40bn of assets from eurozone banks to help them during the financial crisis.

The ECB raised the key interest rate in July from 1.25% to 1.50%.