ECB rate down to low of 2%

The European Central Bank has lowered its benchmark interest rate by 0.5% to 2% and the ECB hinted that the rate would fall further. The rate has now more than halved in the past three months.

ECB president Jean-Claude Trichet said: "Economic activity throughout the world, including the euro area, has weakened further. In particular, foreign demand for euro area exports has declined, and euro area domestic activity has contracted in the face of weaker demand prospects and tighter financing conditions."

Trichet said he expects 2010 to be “the year of the recovery and the pickup".

The last time the European rate was at 2% - the lowest level ever - was between June 2003 and December 2005.