ECB cuts main rate to 1%

The ECB (European Central Bank) lowered its key interest rate by a quarter percentage point to 1 percent but kept the overnight deposit rate, which is acting as a floor for money markets, at 0.25 percent, narrowing the gap between its policy rates, rather than cutting the lowest of these to zero. The ECB has been lowering rates, from 4.25 percent, since last October.

"The Eurosystem will purchase euro-denominated covered bonds. [...] We expect to engage in a program which could be around 60 billion euros (US$80 billion)," ECB president Jean-Claude Trichet told a news conference after its monetary policy decision.