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| Version 2 | Version 3 |
|---|---|
| ECB reduces rates to record low | ECB reduces rates to record low |
| (about 2 hours later) | |
| The European Central Bank (ECB) has cut interest rates in the eurozone to a record low of 1.25% from 1.5%. | The European Central Bank (ECB) has cut interest rates in the eurozone to a record low of 1.25% from 1.5%. |
| The cut was smaller than had been expected. Most economists had predicted a half a percentage point cut to 1%. | |
| It is the sixth time the ECB has lowered its key rate since October 2008, when it stood at 4.25%, as it tries to boost economic activity. | It is the sixth time the ECB has lowered its key rate since October 2008, when it stood at 4.25%, as it tries to boost economic activity. |
| The unemployment rate in the eurozone rose to 8.5% in February, its highest level in almost three years. | The unemployment rate in the eurozone rose to 8.5% in February, its highest level in almost three years. |
| Analysts who had hoped for a larger cut were disappointed. | Analysts who had hoped for a larger cut were disappointed. |
| "It doesn't make much of a change in the sense that rates are already very low," said Philippe Gijsels, strategist at Fortis in Brussels. | "It doesn't make much of a change in the sense that rates are already very low," said Philippe Gijsels, strategist at Fortis in Brussels. |
| "But it sends the signal that they don't mean business and continue to be behind the curve." | "But it sends the signal that they don't mean business and continue to be behind the curve." |
| Quantitative easing? | Quantitative easing? |
| ECB President Jean-Claude Trichet hinted that the bank could lower rates even further. | |
| "I do not exclude that we could in a very measured way go down from the present level," he said. | |
| ECB President Jean-Claude Trichet said the bank could make further cuts | |
| However, he did not reveal whether the ECB would follow other central banks in moving towards quantitative easing. | |
| He said the bank would decide whether to take further non-standard measures in its monetary policy at its next meeting in May. | |
| Both the Bank of England and the US Federal Reserve have introduced quantitative easing - whereby they increase the amount of money in the system - as they try to counter the economic downturn. | Both the Bank of England and the US Federal Reserve have introduced quantitative easing - whereby they increase the amount of money in the system - as they try to counter the economic downturn. |
| Gloomy forecasts | |
| It was confirmed in November last year that the eurozone was officially in a recession. | It was confirmed in November last year that the eurozone was officially in a recession. |
| The ECB has said that it expects GDP in the 16-nation bloc to shrink between 2.2% and 3.2% this year. | The ECB has said that it expects GDP in the 16-nation bloc to shrink between 2.2% and 3.2% this year. |
| But the Organisation for Economic Cooperation and Development (OECD) predicted this week that the eurozone economy would contract by 4.1%. | But the Organisation for Economic Cooperation and Development (OECD) predicted this week that the eurozone economy would contract by 4.1%. |
| The OECD also warned that the unemployment rate could rise to almost 12% in 2010. | The OECD also warned that the unemployment rate could rise to almost 12% in 2010. |