Eurozone interest rates fell by half a percentage point to the lowest level in more than three years yesterday as the European Central Bank said that it expected the single currency area's recession to deepen and signalled that borrowing costs could fall further.

In a sign of the extent to which eurozone policymakers have been taken aback by the ferocity of the downturn, Jean-Claude Trichet, ECB president, warned that growth forecasts it published only last month would have to be revised downwards.