ECB cuts interest rates for 7th time in a row amid tariff ‘tensions’

The bank said in a statement that “the outlook for growth has deteriorated due to rising trade tensions”.

It cited “exceptional uncertainty” about the future economic situation, saying future rate decisions would be taken on a meeting by meeting basis.

The bank’s move should support economic activity in the 20 countries that use the euro currency by making credit more affordable for consumers and businesses.

The bank’s rate-setting council decided at a meeting in Frankfurt to lower its benchmark rate by a quarter percentage point to 2.25 per cent. The bank has been steadily cutting rates after raising them sharply to combat an outbreak of inflation from 2022 to 2023.

Now that inflation has fallen, growth worries have taken centre stage. The economy in the 20 countries that use the euro grew a modest 0.2 per cent in the last three months of 2024. Inflation was 2.2 per cent in March, close to the bank’s target of 2 per cent.