European Central Bank Cuts Interest Rate
The European Central Bank tried to give the continent’s flagging economy a lift Thursday with a half-percentage-point cut in interest rates.
Faced with gloomy economic forecasts, ECB President Wim Duisenberg said the bank’s governing council had weighed “not even the ‘if’ of a cut, but how much.” The bank cut its key refinancing rate to 2.75% from 3.25% -- where it had stood for 13 months to the growing dismay of governments, investors and many economists.
Duisenberg said economic growth in the 12 nations that share the euro -- already sluggish at 0.3% in the third quarter -- is threatened by “the persistently high degree of uncertainty.”
“Geopolitical tensions with potential consequences for oil prices, developments in financial markets, the sluggish growth of the world economy and the persistence of global imbalances are all factors that weigh adversely on confidence,” he said.
There was no immediate lift for European stock markets, however, as key indexes fell 2.9% in Germany, 1.3% in France and 0.4% in Britain.
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