ECB cuts key rates in surprise move

The European Central Bank surprised financial markets on Thursday by paring back its key interest rates to new all-time lows.

Against a background of growing concern that the single currency area is on the verge of deflation, the ECB cut its central "refi" refinancing rate to 0.05 percent from 0.15 percent.

It also lowered the deposit rate to minus 0.20 percent from minus 0.10 percent and trimmed its marginal lending rate to 0.30 percent from 0.40 percent, it said in a statement.

Few analysts had expected any further rate cuts this month, arguing that, with eurozone borrowing costs already at record lows, a cut would not prove particularly effective.

ECB President Mario Draghi was scheduled to explain the reasoning behind the move at his regular monthly post-meeting news conference.

And the financial markets are betting on additional policy easing measures, such as the announcement of an asset purchase programme, analysts said.

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