The European Central Bank (ECB) announced a fresh stimulus package on Thursday as it cut interest rates and agreed a new round of bond purchases to help euro zone growth.

In a statement, the ECB said it cut its deposit rate to a record low of -0.5% from -0.4% and will restart bond purchases of 20 billion euros a month from November.

The ECB also eased the terms of its long term loans to banks and introduced a tiered deposit rate to help banks. 

ECB President Mario Draghi said: “We have headroom to keep going on for some time at this rhythm …

“We still think the probability of recession for the euro area is small, but it’s gone up.”

The ECB said: “The Governing Council now expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics …”