European Central Bank Surprisingly Cuts Interest Rates

Mario Draghi (pictured) took over as president of ECB this week, replacing Jean-Claude Trichet, who remained at the post for eight years. Photo by EPA/BGNES

In a surprise move, the European Central Bank (ECB) cut Thursday Eurozone interest rates to 1.25% from 1.5%.

New ECB president Mario Draghi, cited by BBC, told the media that growth in the Eurozone was likely to remain weak.

He said that Europe's financial crisis and a slowdown in global growth meant the Eurozone is facing an "environment of high uncertainty".

Meanwhile, the Group of 20 industrial and developing nations G-20 are holding an emergency meeting in Cannes to discuss the Eurozone debt crisis.

"Some of the risks to growth were already evident and this makes a significant downward revision to forecasts and projections for average real GDP (Gross Domestic Product) growth in 2012 very likely," Draghi has stated.

Inflation in the Eurozone, currently 3%, would remain at "high" levels for some months, driven by higher energy and commodity prices.

But he forecast that inflation would fall to below 2% during 2012.

Draghi took over as president of the bank this week, replacing Jean-Claude Trichet, who remained at the post for eight years.

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