The ECB will also expand its quantitative easing programme from €60bn to €80bn a month.
The scheme will now include the purchase of corporate bonds as well as government debt.
The bank has 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.
The package of measures, including the decision to cut the benchmark interest rate, was more radical than investors had expected.
Stock markets rallied in response, with Frankfurt rising 2.3% and Paris jumping 3%.
ECB reveals surprise stimulus moves
10 March 2016
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The European Central Bank has cut its benchmark interest rate to 0% from 0.05% as part of a package of measures intended to boost the flagging eurozone economy.
