The sharp drops in borrowing costs reported by the ECB indicated that cuts it has announced in interest rates are being passed on to the real economy. Including last week's 50 basis point cut, the ECB has slashed official borrowing costs by 275 basis points since early October to 1.5 per cent, the lowest ever.

Economists estimate that the full effect of cuts in ECB interest rates typically takes six months to feed through. But according to the ECB statistics, the interest rate on floating-rate eurozone mortgages and those with rates initially fixed for up to a year fell by 70 basis points in January to an average of 4.39 per cent. Interest rates on similar loans to businesses fell by 65 basis points to 4.73 per cent.

So far, the ECB has not embarked on programmes of “credit easing” or “quantitative easing” as unveiled by the US Federal Reserve and the Bank of England.