Eurozone interest rates cut to a record low of 0.5%
The European Central Bank on Wednesday delivered an emergency quarter-point cut in interest rates but its president Mario Draghi cautioned governments in the recession-hit eurozone against "unravelling" their austerity policies .
The ECB's governing council announced the first cut in borrowing costs since July 2012, reducing interest rates to a record low of 0.5%.The bank's policy meeting in Bratislavamade its decision against a backdrop of weak economic data including unemployment across the 17 member countries of the single currency hitting a record high of more than 12%
The euro fell more than 1% against the dollar to $1.304 in the wake of Draghi's comments. The ECB president also suggested that the ECB would consider imposing a negative interest rate on deposits held at the central bank, to prevent banks parking money at the ECB instead of lending it out to firms. The ECB's deposit rate already stands at zero.
Explaining the bank's decision to cut rates in his regular press conference, Draghi pointed out that GDP across the eurozone has now declined for five consecutive quarters, and, "weak economic sentiment has extended into spring of this year".