By Jonathan Davies

The European Central Bank (ECB) has lowered its benchmark interest rate to a new record low of 0.05%.

The move comes as a huge shock to economic analysts. Only in June, the ECB cut rates from 0.25% to 0.15% and became the first major bank to introduce negative interest rates.

Mario Draghi, President of the ECB, said the bank will launch an asset backed securities purchase programme.

Mr Draghi said: "The Eurosystem will purchase a broad portfolio of simple and transparent asset-backed securities with underlying assets consisting of claims against the euro area non-financial private sector under an ABS purchase programme.

"This reflects the role of the ABS market in facilitating new credit flows to the economy and follows the intensification of preparatory work on this matter."

It's hoped the decision will improve liquidity in the European financial market and encourage lending.

With the eurozone economy stalling and consumer confidence at record lows, the ECB is under huge pressure to inspire and spark a recovery.

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