ECB Cuts Rates by a Quarter PointThe European Central Bank cut its main interest rate by a quarter of a percentage point Thursday, making only its second cut this year following heavy pressure for a rate cut to spur flagging economic growth.The bank had previously stuck with its line that fighting inflation in the 12-nation euro zone was its first priority, easing rates only once while the U.S. Federal Reserve cut rates seven times. But with inflation showing signs of easing, the bank's 18-member policy council decided to join central banks elsewhere in trying to lift the economy amid a global recession. The Bank of England and the Bank of Japan have also cut rates in recent months. Interest rates are the ECB's main tool for controlling inflation in the European Union nations using the region's common currency, the euro. By raising its rate, the bank can discourage borrowing and dampen the risk of inflation. By lowering it, the bank makes loans cheaper as a way of stimulating the economy. Thursday's move left the bank's main interest rate at 4.25%. |
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