updated 12/4/2008 8:02:27 AM ET 2008-12-04T13:02:27

The European Central Bank has cut its benchmark interest rate to 2.5 percent, following similar moves by central banks across the continent.

The rate was previously at 3.25 percent, and some analysts had predicted it could have cut rates even lower in light of the financial meltdown.

The move comes less than an hour after the Bank of England slashed its own interest rates by 1 percentage point. That brings its key rate to 2 percent — the lowest since 1951 — as it, like the ECB, works to ward off a prolonged recession.

The Swedish Riksbank has also cut its key interest rate, by a record 1.75 percentage points to 2 percent, its biggest cut since it started using the repo rate as its key rate in June 1994.

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