European Central Bank cuts interest rate to record low

The European Central Bank cut its benchmark interest rate to a record low on Thursday in an effort to free up the flow of credit and prevent the euro zone crisis from worsening, The New York Times reported.

The ECB cut its benchmark rate from 1 percent to 0.75 percent, a move which is likely to be welcomed by economists and political leaders but also carries risk, said The Times.

The move is meant to make it cheaper for businesses and consumers to take out loans, said the Associated Press. The ECB also cut the interest rate paid to banks on overnight deposits to zero, by a quarter percentage point, pushing banks to lend money.

The ECB's cuts coincided with actions taken by other banks on Thursday, including the Bank of England, which added another £50 billion ($77.6 billion) in stimulus money, and the Bank of China, which cut its key interest rates, said the BBC.

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ECB President Mario Draghi said at a press conference, "Economic growth in the euro area continues to remain weak with heightened uncertainty weighing on both confidence and sentiment," according to Bloomberg.

Draghi conceded that the debt crisis had led to an economic slowdown, even impacting the strongest countries in the region, said The Wall Street Journal. "We can genuinely say that this measure is addressed to the whole of the euro area, and not only to specific countries," he said.

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Draghi said conditions were not as bad as they were in late 2008, following the collapse of Lehman Brothers, and he said there was no coordination in efforts between the ECB and the banks of China and England, according to Reuters.

The US Federal Reserve will hold its next meeting on July 31 and August 1, while the Bank of Japan meets next week.

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