The European Central Bank on Thursday cut its main interest rate by a half percentage point to 1.5 percent, dropping the cost of borrowing in the 16 countries that use the euro to a new record low amid grim economic news. The ECB's decision to slash the main refinancing rate for the euro zone, which has 330 million people and accounts for more than 15 percent of the world's gross domestic product, was in line with expectations. The Bank of England earlier Thursday also cut its rates by a half percentage point, to a new low of 0.5 percent, and announced measures to go further in stimulating the sagging economy by expanding the money supply. The ECB made a half-point cut in January to 2 percent – its previous record low – but left rates unchanged last month. ECB President Jean-Claude Trichet was to discuss the latest decision at a news conference later Thursday. The euro zone fell into recession last year. The gloom deepened in the fourth quarter, when its economy shrank by 1.5 percent compared with the previous three months. Business and consumer confidence in the euro zone hit a new low in February, a sign that the recession will deepen again in the current quarter. Unemployment has been rising. Both the euro and the pound were down after the decisions by nearly one percent against the dollar at $1.2542 and $1.4065.
