The European Central Bank cut interest rates today to boost the euro zone economy, surprising financial markets by dropping its main refinancing rate to zero from 0.05 per cent.

It also expanded its quantitative easing asset-buying programme to €80 billion a month from €60 billion and cut its deposit rate to -0.4 per cent from -0.3 per cent, charging banks more to keep their money with the ECB.

The moves - which knocked the euro down one per cent against the dollar - reflect the ECB's struggle with falling inflation expectations and worries about ultra low price growth.