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ECB Cuts Rate to Fight ‘Prolonged’ Inflation Weakness

European Central Bank President Mario Draghi warned the euro area risks a “prolonged period” of low inflation as the bank cut its benchmark interest rate to a record.

Pledging to keep borrowing costs low for an “extended period,” Draghi said weakening price pressures justified the ECB’s surprise decision to cut its main refinancing rate today by a quarter point to 0.25 percent. Just three of 70 economists surveyed by Bloomberg News anticipated the action even after inflation faded to its slowest in four years.