ECB Cuts Key Rate a Half-Point
The European Central Bank has cut its main interest rate by a half percentage point to 1.5% amid increasingly grim economic news.

Thursday's cut takes the main refinancing rate for the 16-nation euro zone to a new record low and is in line with expectations.

ECB President Jean-Claude Trichet was to discuss the decision at a news conference later Thursday. The ECB made a half-point cut in January but left rates unchanged last month.

The Bank of England earlier Thursday cut its rates by a half percentage point to 0.5%.

BoE Cuts Interest Rates to 0.5%
The Bank of England cut official interest rates by half a percentage point to 0.5% and announced plans to expand the domestic money supply on Thursday as its attempted to revive Britain's ailing economy.

The bank's decision to drop rates to a new record low -- the sixth cut in as many months -- was overshadowed by its move to begin so-called quantitative easing, more colloquially known as "printing money."

But instead of making new banknotes, the central bank will buy assets, such as government securities and corporates bonds, without borrowing to fund the purchases -- essentially creating new money.

The bank said it will purchase 75 billion pound ($106 billion) of assets over three months by issuing central bank reserves.

By buying the assets, the Bank of England will be expanding the monetary base and hopefully encouraging the banks to lend in the wider economy instead of just hoarding it.

"In these highly uncertain times, there are merits to stimulating the economy through a variety of different channels," Bank of England Governor Mervyn King said in a letter to Treasury chief Alistair Darling seeking permission for the measure. The letter was released by the central bank alongside the official announcement.

The figure was less than expected by many economists, who had pegged the purchases at closer to 150 billion pounds.

The bank said that it will monitor the effectiveness of the program in boosting the supply of money and spending growth at its future meetings, "adjusting the scale of purchases as appropriate."

The nine-member monetary policy committee said members had voted to move to quantitative easing after judging that the 0.5 percentage point cut in rates would still leave leave a "substantial risk" of undershooting the bank's 2% inflation target in the medium term.

"Accordingly, the committee also resolved to undertake further monetary actions, with the aim of boosting the supply of money and credit and thus raising the rate of growth of nominal spending to a level consistent with meeting the inflation target in the medium term," the bank said in a statement accompanying the rate decision.

The bank said it expects inflation to fall below the target by the second half of the year after dropping to 3% in January.

Britain fell into recession last year for the first time in nearly two decades and economists have warned that the downturn could be prolonged.