European Central Bank cuts interest rates to 2%
Despite ongoing trade uncertainties, the ECB maintains its forecast for eurozone GDP growth at 0.9% in 2025, as estimated in March, but has slightly lowered next year’s projection to 1.1%, down from the previous estimate of 1.2%.
Christine Lagarde, president of the European Central Bank.
On Thursday, the European Central Bank (ECB) cut its main interest rate by 0.25 percentage points, aiming to stimulate economic growth in the eurozone amid threats posed by the trade war with the United States.
The deposit rate, the ECB’s benchmark for monetary policy, was reduced to 2.0%. This marks the eighth rate cut in the past year by the Frankfurt-based institution.
The European Central Bank oversees the issuance of the euro across the European Union and performs all other central banking functions, much like the Federal Reserve in the United States.
Similarly, it announced that inflation in the Eurozone is expected to reach the 2% target by 2025, earlier than previously anticipated.
In its latest forecasts, the ECB expects eurozone GDP to grow 0.9% in 2025, consistent with its March estimate, but has lowered the projection for next year to 1.1%, down from the previous forecast of 1.2%, citing “uncertainty” caused by U.S. President Donald Trump’s tariff trade offensive.
Christine Lagarde says she will finish her term at the ECB
"I have always been and am fully determined to fulfill my mission and I am determined to complete my mandate," Lagarde said during a press conference following the ECB’s latest interest rate decision.
She added that, after a series of rate cuts, the ECB is now in a “good position” to manage ongoing uncertainty.
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