FRANKFURT - THE European Central Bank cut interest rates a record 75 basis points to 2.50 per cent on Thursday, a bigger move than economists had forecast but in line with the expecations of financial market traders.

It is the biggest cut in the ECB's 10-year existence and is a step up from the two 50 basis point cuts made since October.

It also suggests a change in tack by the bank despite recent comments from top officials that bumper cuts would serve little purpose and could spark fear in financial markets.

Before the decision, opinions had been split on how far the ECB would cut rate, between those who thought it would stick to a tried-and-tested 50 basis point cut and those who thought it would cut by a record 75 basis points or more.

'They are now taking bolder decisions and this reflects a shift in perception in the ECB,' said Bank of America economist Gilles Moec.' 'The recognition that we are not in ordinary times, and that this is not an ordinary recession probably goes in right direction to boost the real economy and credit markets.' Two thirds of analysts had expected a 50 basis point move but a significant minority, 24 of the 81 polled by Reuters, expected more.

Financial market traders, who usually bet on faster and more aggressive moves, were also expecting a 75 basis point cut. The euro trimmed losses against the US dollar after the decision and Bund futures turned negative.

The cut followed a steady flow of dire economic data over the last two weeks and after aggressive rate cuts by central banks in Britain, Sweden and New Zealand earlier in the day.

'It is encouraging but I would still argue they should have acted in a even bolder way,' said UniCredit Cheif Economist Marco Annunziata.

'At least doing 75 and moving in the direction of market expectation and it is an encouraging sign that the ECB is realising that the crisis is serious and it requires a policy response which is more flexible and more decisive than the usual measured pace of 50 basis points.'

ECB President Jean-Claude Trichet, will hold a news conference at 1330 GMT to explain the decision and will also give details of new staff forecasts for the euro zone economy.

They are expected to confirm that the euro zone economy is in serious trouble.

Before the rate decision some analysts had thought the figures may have swayed the normally cautious Governing Council to act boldly with rates. Now both the numbers and Mr Trichet's tone in the news conference will be closely scrutinised for clues on the future rate path.

This month's ECB meeting is taking place in Brussels, one of the bank's two away-days from its Frankfurt home.

The 15-nation bloc is officially following a second quarterly contraction in economic output and analysts don't see the economy growing again until the third quarter of next year - and then only marginally.

(For poll please double click on ) Adding to the European gloom on Thursday Credit Suisse said it was slashing another 5,300 jobs, 11 per cent of its total workforce, Nomura said it would axe up to 1,000 European staff and electronics to lighting firm Philips became the latest corporate giant to warn on profits.

Inflation fell to 2.1 per cent in November on the back of falling commodity prices, and is expected to keep dropping to below the ECB's 2 per cent price stability ceiling. -- THOMSON REUTERS