The European Central Bank (ECB) announced a reduction in its key interest rate to a historic low of 0.75% on Thursday. This decision is a significant step intended to bolster economic activity across the Eurozone, which continues to grapple with financial instability.

In addition to the main refinancing rate, the ECB also lowered the deposit rate to 0%. This measure is designed to encourage banks to lend money rather than deposit it with the central bank.

ECB President Mario Draghi cited concerns about the weakening economic outlook as a primary driver for the rate cut. He emphasized the need for coordinated action to address the sovereign debt crisis and promote sustainable growth.

The move was largely anticipated by financial markets, which have been closely monitoring the ECB’s response to the escalating economic challenges in the region.

Economists suggest that the rate cut, while helpful, may not be sufficient on its own to resolve the underlying structural problems facing the Eurozone. Further measures, including fiscal reforms and increased integration, may be necessary to achieve a lasting recovery.

The ECB’s decision reflects the growing urgency among policymakers to address the economic slowdown and prevent a deeper recession. The impact of the rate cut on lending and investment will be closely watched in the coming months.