ECB cuts benchmark interest rate to 0.5 pct

[May 02, 2013]  FRANKFURT, Germany (AP) -- The European Central Bank has cut its benchmark interest rate to a new record low to stimulate the lagging economy in the 17 countries that use the euro.

The bank's rate-setting council lowered the refinancing rate a quarter-point to 0.5 percent at a meeting in Bratislava, Slovakia.

The move comes amid fears the eurozone economy may not recover later in the year from its recession.

In theory, a cut helps companies by lowering borrowing costs for banks that have borrowed from the ECB so they could loan more. It also signals the ECB's willingness to support the economy.

Economists, however, warn this cut may not have much direct effect since banks are not passing on low rates in indebted countries that need help the most.

[Associated Press]

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