BUSINESS BRIEF

European Central Bank cuts refi rate to 0.25%

11/8/2013

FRANKFURT, Germany — The European Central Bank startled investors with a surprise cut in its benchmark interest rate aimed to boost a hesitant recovery in the 17 countries that use the euro.

The bank lowered the benchmark refinancing rate to a record-low 0.25 percent from 0.5 percent during a meeting Thursday of its 23-member council in Frankfurt.

Recent economic data, such as unexpectedly low inflation, showed the euro zone’s recovery remains weak. But most economists thought the bank would wait to offer more economic stimulus at least until December.

A lower refinancing rate makes it cheaper for banks to borrow. The hope is that would encourage banks to charge less for loans, making it easier for firms to expand and create jobs.