ECB slashes interest rates to 1.5%

Ref Ralph Atkins, Financial Times March 5 2009

Eurozone interest rates have been slashed by a half percentage point to the lowest level ever. The interest rate in the Eurozone will fall from 2 per cent to 1.5 per cent, bringing the total rate cut since early October to 275 basis points.

But official borrowing costs are still higher in the Eurozone than in the US and the UK - highlighting the central bank’s conservative stance in relation to the US Fed and the Bank of England.

The latest cut came after ECB governing council members received updated forecasts that indicated much worse contraction than in previous projections, released in December.

Spain reported industrial production in January was 20.2 per cent lower than a year before. German engineering companies reported January’s foreign orders were almost 50 per cent lower than a year before.