UK, Europe central banks cut key rates

NEW YORK (CNNMoney.com) -- European and British central banks cut interest rates on Thursday, responding to the increasing concern about economic conditions throughout the world.

The European Central Bank cut its minimum bid rate on the main refinancing operations of the Eurosystem by one half percentage point, to 3.25%.

The bank was expected to explain its reasons for the cut at a news conference later in the day.

Earlier, Britain's central bank cut its key lending rate by a third, a bigger reduction than expected, citing worsening economic conditions in the U.K. and around the world.

The Bank of England's Monetary Policy Committee said it voted to reduce the official rate paid on commercial bank reserves by 1.5 percentage points, to 3%.

"There has been a very marked deterioration in the outlook for economic activity at home and abroad," the bank said in a statement.

The decision by the central banks follows other rate cuts around the world.

The Federal Reserve and central banks in China and Japan cut rates last week. Australia's Reserve Bank this week cut interest rates by 0.75 percentage point, and South Korea's central bank was expected to cut rates Friday.

CNN Wire reports were used in compiling this article.