ECB cuts rates by 50 basis points to 2 percent amid economic crisis

The cut, in line with consensus forecasts, marks the fourth cut in just over three months amidst signs the financial crisis is biting hard into the real economy and inflation threatens to fall further below the ECB's 2 percent ceiling, Reuters reported.Â

In a Reuters poll, majority of economists had expected the ECB to take another 50 basis points from benchmark credit costs, although the level of uncertainty around the decision was unusually high.

Some analysts had forecast the ECB would leave rates on hold and others expected a smaller, 25-point move, while financial markets had priced in 50 basis points or more, in the poll.

Many observers within the eurozone, politicians in particular, have called on the ECB to go lower still, into what analysts call "unexplored territory," as several other major central banks have done.

The US Federal Reserve and the Bank of Japan have brought their main interest rates to virtually zero, while the Bank of England cut its last week to 1.50 percent, the lowest level in its 315-year history.

The eurozone entered its first recession last year, and with almost all economic indicators pointing south, it appears set to remain in a slump for most of 2009.

The ECB is faced with a long series of bleak economic indicators and has seen eurozone inflation fall to 1.6 percent in December, below the banks target of just under 2.0 percent.