ECB Cuts Interest Rates as Recession Fears Grow

The European Central Bank cut interest rates by a quarter of a point on Thursday to counter the twin threats of recession and deflation in the euro zone, and is expected to unveil fresh measures to help banks hurt by the bloc’s debt crisis.

The widely expected rate cut, back to a record low of 1 percent, came hours before a high-stakes EU summit which will aim to agree on a plan to defuse the crisis, with France and Germany pushing for rule changes to stricter budget discipline in the bloc.

The ECB, which euro zone officials say has been closely involved in drafting plans for tighter fiscal integration in the bloc, has pressed governments to toughen their budget rules and signaled it could do more to tackle the crisis if they deliver.

Source: Reuters

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