The European Central Bnka cut its key lending rate to a record low of 1.5 percent Thursday in an attempt to boost lending. The Bank of England also cut its key interest rate by 50 basis points to a record low of half a percent.

At a press conference in Frankfurt, Germany the Vice-President of the ECB Jean-Claude Trichet said “the world economy has weakened substantially in recent months, affecting increasingly also emerging market economies. In a climate of heightened uncertainty, a severe fall in world trade volumes has been accompanied by a pronounced decline in domestic demand in the euro area. As a consequence, euro area real GDP contracted markedly in the fourth quarter of 2008, by 1.5% on a quarterly basis, according to Eurostat’s first estimate. Available data and survey indicators suggest that economic activity in the euro area remained weak in early 2009.”

Thursday’s decision was the ECB’s fifth rate cut since October 2008, which has brought eurozone rates down from 4.25%.

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