Continuing its efforts to boost the economies in the region, the European Central Bank on Thursday cut the benchmark interest rate by 50 basis points to 2 per cent.
The latest round of rate cut which is the first in 2009 would be effective for the 16 nations in the eurozone.
In a statement, ECB said the refinancing rate - the rate at which the apex bank pumps in bulk of the liquidity for the banking system through weekly refinancing operations - would be slashed to 2 per cent from 2.50 per cent.
This is the fourth consecutive reduction of rates since October last year.
The central bank also said the interest rates on marginal lending facility and deposit facility would be set at 3 per cent and one per cent, respectively.
All the three measures would be effective from January 21.
In November 2008, data showed that eurozone had officially slipped into recession - two consecutive quarters of negative growth - with the region's GDP in the third quarter shrinking by 0.2 per cent.
The global financial turmoil has taken a toll on the European economies with many of the majors including Germany falling into recession.
Earlier this month, the Bank of England had slashed its benchmark rate to 1.50 per cent.
Elsewhere, the world's first and second largest economies - US and Japan - have reduced their key rates to nearly zero, as they explore options to cope with the economic turbulence.
Currently, there are 16 nations which come under eurozone, comprising countries whose common currency is euro.
They are Germany, France, Spain, Italy, Netherlands, Austria, Belgium, Cyprus, Finland, Greece, Ireland, Luxembourg, Malta, Portugal, Slovakia and Slovenia.