The European Central Bank has cut the interest rate across the eurozone to a new record low of zero.

Mario Draghi, the central bank president, also boosted the ECB’s quantitative easing programme by €20bn, to €80bn per month.

That means it will be buying more assets with newly printed money each month, in an attempt to drive inflation above zero.

The scheme will now include the purchase of corporate bonds as well as government debt.

European share indices reacted positively to the news with France’s CAC 40 and Germany’s DAX moving higher after the announcement. 

The euro zone's Euro STOXX Banks index surged 6%.

Nicholas Wall, fixed income portfolio manager at Invesco described it as a bold move which will be very bullish for risk assets.

"The biggest impact the ECB could have had today was to shift investors up the risk spectrum and hold their hand while doing so given global market volatility – this is exactly what the ECB have done," he said.

"This is a message from Draghi to the markets that it’s ok to buy European risk assets," Wall added.

Draghi also decided to further cut the bank deposit rate. It now stands at minus 0.4%, down from minus 0.3%, meaning that banks must pay more to deposit funds with the ECB.