ECB cuts rates in shock move to tackle crisis

The European Central Bank has made the unexpected move to cut interest rates by 25 basis points from 1.5% to 1.25%, as new president Mario Draghi moves to combat the crisis in Europe.

The cut was unexpected, with analysts pencilling in the first reduction in December, but Draghi and the committee have decided now is the time to act, at a time when Italian and Spanish borrowing costs are at record highs. "The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 1.25%, starting from the operation to be settled on 9 November 2011," said the ECB. The move unwinds the action taken by former President of the ECB Jean-Cluade Trichet who raised rates earlier this year before events in Greece and other peripheral economi...