It looks like it is not only South Africa which is cutting interest rates of late. The European Central Bank (ECB) decided yesterday (Thursday) to slash interest rates again. European Central Bank President Jean-Claude Trichet, cut the banks benchmark interest rate by 25 basis points to 1.25% and it could still be lowered further next month as they try to find a way to help the struggling European economy. The ECB has now reduced interest rates by 3 percentage points since early October. At 1.25 percent, the main rate is the lowest since the ECB took charge of monetary policy in 1999.

Trichet said the key rate may be reduced further “in a very measured way.” The deposit rate, which the ECB cut to 0.25 percent, is at “an extremely low level” and has probably reached its floor, he said. The ECB is allowing the deposit rate — the rate it pays banks on overnight deposits — to steer short-term market borrowing costs. This from a report on Bloomberg.

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