ECB Cuts Interest Rates as Inflation and Growth Projections Shift

The European Central Bank lowers key rates by 25 basis points, citing updated inflation forecasts and ongoing economic challenges.

The ECB reduced its three key interest rates by 25 basis points, signaling a less restrictive monetary policy stance to support economic growth.
Inflation is projected to average 2.3% in 2025, with a return to the 2% target expected by 2027, driven by moderating wage growth and easing cost pressures.
Eurozone economic growth forecasts were revised downward to 0.9% for 2025 and 1.2% for 2026, reflecting weaker exports and investment amid global uncertainty.
The ECB highlighted risks to growth and inflation from geopolitical tensions, trade policy uncertainty, and climate-related disruptions.
Despite easing borrowing costs, lending remains subdued as the effects of previous rate hikes continue to weigh on credit conditions.