The European Central Bank cut interest rates by a quarter of a percentage point, taking markets by surprise and providing a welcome boost to home-owners across the euro zone. The 0.25 per cent drop now brings interest rates to a record low of 0.25 per cent "We may experience a prolonged period of low inflation to be followed by gradual upward movements towards an inflation rate of below but close to 2 percent later on," ECB president Mario Draghi told a news conference.