FRANKFURT — The European Central Bank lowered its benchmark interest rate Thursday, as the new president, Mario Draghi, acted quickly to address a looming recession and acute tension caused by the sovereign debt crisis.

Mr. Draghi, assuming office at one of the most dramatic points in the history of the euro zone, signaled with the decision that he may be more willing than his predecessor, Jean-Claude Trichet, to tolerate inflation in the name of growth and economic stability. The bank cut the benchmark rate to 1.25 percent from 1.5 percent.  Read more