(Reuters) The European Central Bank cut interest rates to a record low on Thursday and said it could take them lower still to prevent the euro zone's recovery from stalling as inflation tumbles.
The move took financial markets by surprise - the euro fell sharply in response while European shares rose. <FRX/>
Underlining its support for the euro zone economy, the ECB also said it would prime banks with as much liquidity as required until mid-2015.
The 23-man Governing Council had faced intense pressure to act after a shock slump in euro zone inflation to 0.7 percent in October, far below the ECB target of just under 2 percent.
The ECB cut its main refinancing rate by 25 basis point to 0.25 percent. It held the deposit rate it pays on bank deposits at zero and cut its emergency borrowing rate to 0.75 percent from 1.00 percent.
Draghi stressed the ECB still had room to act if needed.
"We have a whole range of instruments to activate before reaching the lower bound ... in principle we could even cut further the interest rate," he told a news conference.
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