ECB’s new boss Draghi unveils shock rates cut

The European Central Bank cut interest rates by a quarter point yesterday in a surprise move as new president Mario Draghi warned that growth in the eurozone was likely to remain weak.

Economists bet on further cuts to come after rates in the 17-country area were trimmed to 1.25 per cent.

Draghi, an Italian, faces unprecedented turmoil in his first week at the bank’s helm, with eurozone leaders contemplating a future without Greece and economic policy paralysis in his home country threatening to pitch Rome into the storm.

He warned that Europe’s debt finance crisis and a slowdown in global growth would pitch the euro area into an “environment of high uncertainty”.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “Draghi indicated that the decision to cut interest rates had been unanimous… It also supports the view that further ECB rate cuts are likely.”