The European Central Bank unexpectedly slashed its benchmark rates Thursday as the continent has been struggling to boost economic recovery and get out of deflationary pressures, pushing euro to a 14-month low against the dollar.

The ECB cut the key refinancing rate to 0.05 to 0.15 percent, while analysts had been expecting an unchanged decision. The new rate will take effect from the operation to be settled next Wednesday, the central bank said.

The interest rate on the marginal lending facility will be cut by 10 basis points to 0.30 percent, the ECB said.

The interest rate on the deposit facility will be decreased by 10 basis points to -0.20 percent. All the new rates will take effect from Wednesday.

EUR/USD plunged to 1.3023, its lowest since July last year, and nearly 1 percent down from the previous close.

The market is waiting for the press conference of the ECB President Mario Draghi, due at 2:30 p.m. CET, for the details of the decision.

EUR/GBP fell to 0.7930 from 0.7989 and EUR/JPY to 136.88 from 137.80.

Euro falls