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ECB cuts rates in surprise move

Frankfurt - The European Central Bank (ECB) cut its main interest rate by 25 basis points to 1.25% on Thursday as the eurozone's worsening debt crisis outweighed the concern over persistently high inflation.

The ECB also reduced the interest rate on its deposit facility to 0.5% and the rate on the marginal lending facility to 2.0%.

ECB president Mario Draghi will explain the governing council's decision at a  news conference - his first at a monetary policy meeting after taking over the reins on Tuesday from Jean-Claude Trichet.

The cut marked a change in policy after the ECB increased its rates in July and April, when it became the first major central bank to hike after the intensification of the financial crisis. Markets are now looking for hints on whether the ECB is preparing to cut rates again next month.

Attention will also focus on other changes in the central bank's policy after the change of guard, especially whether its government bond programme will be boosted.
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