European Central Bank lowers interest rates for seventh time
The European Central Bank cut interest rates on Thursday for the seventh time, aiming to address concerns over economic growth amid President Donald Trump’s escalating tariff measures.
The bank said in a statement that “the outlook for growth has deteriorated due to rising trade tensions,” News.Az reports citing The Washington Times.
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%. 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 center stage. The economy in the 20 countries that use the euro grew a modest 0.2% in the last three months of 2024. Inflation was 2.2% in March, close to the bank’s target of 2%.
The cut was widely expected by analysts given the sudden shadow cast over the eurozone’s growth outlook by Trump’s April 2 announcement of unexpectedly high tariffs, or import tax, on goods from other countries starting at 10% and ranging as high as 49%. The European Union faces a 20% tariff.
At the bank’s last meeting on March 6, ECB President Christine Lagarde had raised the possibility of an upcoming “pause” in the bank’s series of rate cuts. But that option was practically eliminated by Trump’s announcement.
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