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European Central Bank Cuts Interest Rates to Record Low

FILE - The euro sculpture stands in front of the European Central Bank, right, in Frankfurt, Germany.

The European Central Bank has cut its benchmark interest rate in a new effort to boost the eurozone's lagging economy.

ECB President Mario Draghi announced Thursday the rate would drop to 0.05 percent from a previous record low of 0.15 percent and that the bank will begin purchases of private financial assets.

Many analysts viewed it as an indication that officials have grown increasingly concerned that the recent period of very low inflation could persist longer than first thought and may threaten the economic recovery of the 18-nation eurozone. The region's economy was flat in the April to June period.

According to Draghi, the ECB will begin purchasing asset-backed securities and bonds in October.

Many stock exchanges around the world rallied on the news of the rate cut.

Following the announcement, the euro fell to $1.2995. This is the first time it has fallen below $1.30 since July of 2013.