October 8, 2008 / 11:10 AM / 9 years ago

ECB cuts rates by 50 bps in coordinated move

2 Min Read

FRANKFURT, Oct 8 (Reuters) - The European Central Bank cut interest rates on Wednesday for the first time in more than five years as part of coordinated action with other major central banks to shore up the global economy.

The ECB cut its benchmark rate by 50 basis points to 3.75 percent, the first rate cut since June 2003 and sooner than analysts and markets had expected.

"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability," the ECB said in a statement.

"Some easing of global monetary conditions is therefore warranted." The ECB left interest rates on hold at its last meeting on Oct. 2 but ECB President Jean-Claude Trichet opened the door to lower rates when he revealed policymakers had discussed a cut and now thought inflation risks had eased, although not totally disappeared.

The ECB said the decision was taken after a teleconference, which is similar to the decision to cut rates in tandem with the U.S. Federal Reserve on Sept. 17, 2001, when the ECB slashed its benchmark rate by 50 basis points in the wake of the Sept. 11 attacks in the United States.

Reporting by Krista Hughes

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