Interest rates tumbled across Europe and the world yesterday as leading central banks moved to try to limit the ravages of a looming global recession.

The European Central Bank led the way with a record three-quarter point cut in eurozone interest rates as it joined the Bank of England and other central banks in attempting to rekindle growth in stalled economies around the globe.

The ECB's decision to make a bigger than expected reduction in rates to 2.5 per cent, the lowest since mid-2006, while opening the door for more cuts next year, saw it bow to criticism that it has been too cautious in combating the recession gripping the 15-nation eurozone.

But while the ECB's bolder than expected verdict won applause from economists and eurozone businesses, still more aggressive action by the Bank of England and other central banks left European stock markets underwhelmed by Frankfurt's move. Both Germany's Dax index and France's CAC 40 ended yesterday's trading a fraction lower.

Times Archive, 1951: First rise in 11 years takes rate to 2.5%

Clearly, simply, and starkly, the Chancellor presented the most up-to-date picture of the country's economic plight

• Times Archive, 1932: Crisis pushes rates to 2%

• Times Archive, 1939: Bank rate back to pre-war 2%

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• Graphic: Interest rate cuts around the world

As the Bank of England cut British rates by a further 1 per cent to a 2 per cent low not seen since 1951, other economies were not far behind. In Sweden, rates fell by a startling 1.75 percentage points, the biggest reduction since 1992, to 2 per cent.

Elsewhere, New Zealand's central bank announced a record cut of 1.5 points, bringing its rate down to a five-year low of 5 per cent, while acknowledging that further cuts would probably be necessary. Indonesia made a surprise quarter-point cut to its rate.

Despite mounting signs that the eurozone economy is sliding still deeper into recession after shrinking by 0.2per cent in the past quarter, Jean-Claude Trichet, the ECB's President, refused to commit it to further, early reductions in eurozone rates. “I exclude nothing, but I am not precommitting on anything,” he said. “We will look at what is necessary at any time.” Asked whether the ECB might cut rates by a half-point in January, he added: “ For January, I say nothing.”

Economists said, however, that the ECB had paved the way for further cuts in eurozone rates by downgrading its growth and inflation forecasts.

The central bank now sees the eurozone economy shrinking next year by up to 1 per cent - radically down from its September projection for growth in 2009 of between 0.6 and 1.8per cent. In 2010, the ECB now sees a muted recovery, predicting eurozone growth of between 0.5 and 1.5 per cent.

Capital Economics, the consultants, predicted that eurozone rates were now likely to drop to at least 1.5 per cent in the first half of next year.

Pressure for the ECB and other central banks to take still more steps to limit the fallout from global recession was fuelled yesterday as the toll of job losses and dire corporate news from Europe, the US and Asia mounted.

In the US, factory orders plunged by 5.1 per cent in October, in their eighth consecutive monthly fall and the biggest drop in eight years. Official US figures today are expected to confirm that American employers cut as many as 340,000 jobs last month.

In Europe, Credit Suisse announced another 5,300 job cuts that will add to the toll of more than 100,000 jobs lost so far in the financial industry as banks reel from the credit crisis.

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