Thursday, the European Central Bank cut its benchmark interest rate to a new low as the 16-nation economy faces its worst recession since the World War II.

At its meeting in Frankfurt, the Governing Council, the policymaking body of the ECB, reduced the interest rate on the main refinancing operations of the Eurosystem by 25 basis points to 1.00%, effective May 13. The decision was in line with expectations. In the April session, the key interest rate was lowered by a quarter point.

It is widely believed that the central bank would hold fire for a long period after today's rate cut. The ECB has lowered interest rates by a total of three and a quarter percentage points since early October 2008.

Meanwhile, the central bank cut the interest rate on the marginal lending facility by 50 basis points to 1.75% today. On the other hand, the interest rate on the deposit facility was left unchanged at 0.25%.

The President of the ECB Jean-Claude Trichet is set to hold a press conference at 8.30 am ET.

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