The European Central Bank cut its main interest rate by a quarter point to 1 percent Thursday and is poised to unveil more measures to help boost the 16-nation euro zone economy.
The ECB also cut its interest rate on its marginal lending facility — used to lend money to banks overnight — by a half a point to 1.75 percent from 2.25 percent.
It was the fourth time this year that the Frankfurt-based bank — which sets monetary policy for countries that share the euro — lowered rates, coming on top of cuts in January, March and April.
The bank's last quarter point cut to 1.25 percent in April however left markets feeling let down, as a deeper reduction to help the economy back to growth had been expected.
Analysts were looking to bank President Jean-Claude Trichet's news conference for more clues to the bank's outlook and what other steps it might take to support the financial system, such as possible asset purchases or lengthening the term for its credits to banks.
Elsewhere, the Bank of England left its benchmark rate unchanged at 0.5 percent but said it would increase its effort to expand the supply of money in the economy. Iceland's central bank cut official interest rates by 2.5 percentage points to 13 percent to help the country's collapsed economy Thursday, the third cut this year by the Sedlabanki.
The Czech Republic's central bank cuts its rate by a quarter percentage point to 1.5 percent, its lowest level since the country was formed after the split of former Czechoslovakia in 1993. The anticipated move, announced Thursday, followed a half percentage point cut in February.
The export-oriented Czech economy has been hit hard as its major trading partners, including Europe's biggest economy, Germany, face deep
recession.
The U.S.
Federal Reserve and the Bank of England have taken their benchmark interest rates nearly as low as they will go — the Fed funds rate is in a range between zero and 0.25 percent.
Both the Fed and the Bank of England have also embarked on a policy of expanding the money supply by buying securities from banks, known as quantitative easing.
The ECB, however, has indicated it's not willing to bring rates near zero, and it would face challenges in how it would allocate any securities purchases between 16 different member countries if it chose to do so.
The bank's governing council members have voiced differing opinions on the issue, while other observers think the ECB won't take the same path as the Fed and Bank of England.
Bank president Trichet said at the bank's April meeting that he would provide information at Thursday's meeting about more measures to get more money flowing through the economy.
He stressed at the time the bank had already offered many nonstandard tools such as more liquidity and broader collateral rules for banks that want to borrow from the ECB.
Analysts at Commerzbank said they didn't think the ECB would announce buying private banks' securities, but instead, take measures such as lengthening the timeframe the ECB makes credit available to banks.
"...It is not likely to announce the outright purchase of securities on the secondary market," Commerzbank analysts wrote in a research note. "We expect the ECB to further lower the refinancing rate and extend maturities of refinancing operations."
