BRUSSELS, Belgium (AP) — Europe's central banks moved headfirst to confront the recession brought on by the financial meltdown, slashing their interest rates yesterday as fears about the health of the continent's economies grew.

In Brussels, the European Central Bank — meeting away from Frankfurt as it does twice a year — lowered its rate to 2.5 percent from 3.25 percent, putting it at levels last seen in March 2006. The cut was the most aggressive in its 10-year history as central bank to the 15 euro zone countries, a bloc of some 320 million people that accounts for more than 15 percent of the world's gross domestic product.

The growing scale of the economic crisis was highlighted yesterday by announcements that both the Bank of England and Sweden's Riksbank also cut their interest rates sharply, to two percent.

The Riksbank cut by a record 1.75 percentage points, surprising markets, whereas the Bank of England eased its benchmark rate by one percentage point.

Europe's main central banks have been under mounting pressure to ease borrowing costs after a run of dismal economic data indicating the economic slump will be deeper and longer than previously expected.

Speaking to reporters in Brussels, ECB President Jean-Claude Trichet was blunt about growth prospects, saying that "global and euro-area demand are likely to be dampened for a protracted period of time."

Despite the uncertainty plaguing economies worldwide, though, he would not say if more cuts were in the offing.

"I say nothing for January. Nothing," he told reporters, referring to the next interest rate meeting early next year. "We are looking at the situation as cautiously and technically as possible," he said.

Official figures have confirmed that the 15 countries that share the euro are in recession while inflation is falling at a faster rate than anticipated amid sliding energy and commodity costs. In Britain, the government has warned that the economy will contract by over 1 percent in 2009 and that deflation — falling prices — is a bigger threat than inflation in the coming months.

Since their last meetings in early November, when the ECB reduced rates by half a point and the Bank of England cut by a startling 1.50 percentage points, a raft of economic news has suggested a sharply deteriorating economic environment, diminishing price pressures and an ongoing reluctance by banks to resume normal lending to businesses and households.