Oct. 8 (Bloomberg) -- European Central Bank council member Ewald Nowotny said slowing inflation prospects around the world allowed central banks to lower interest rates.

``Inflation, but also growth prospects, have come down significantly, and that allowed central banks to carry out this coordinated action,'' Nowotny said in a telephone interview from Vienna today. ``This should send a clear signal to market participants and should help calm markets.''

The ECB today unexpectedly cut interest rates in coordination with other central banks after the global credit crunch pushed borrowing costs to records and forced governments across Europe to bail out banks.

The ECB cut its benchmark lending rate to 3.75 percent from 4.25 percent, effective Oct. 15, the Frankfurt-based bank said in a statement. It also lowered its marginal lending rate and deposit rate by half a point to 4.75 percent and 2.75 percent respectively.

``That rate level will ensure that inflation expectations remain anchored,'' Nowotny said, ``while today's move should not be seen as a first step in a possible series. The situation has to be assessed as we go along,'' he said.

To contact the reporter on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net

Last Updated: October 8, 2008 08:23 EDT